INSURANCE  LAW 

OF  NEW  YORK 


Being  Chapter  28  of  the  Consolidated  Laws 

and 

Chapter  33  of  1909 

Including  all  amendments  of  1916,  with  notes  and  annotations 


By 

AM  AS  A  J.  PARKER,  Jr, 

of  Albany,  N.  Y. 


THE  BANKS  LAW  PUBLISHING  COMPANY 
23  PARK  PLACE 
NEW  YORK,N.  Y. 
1916 


HG  IS2\ 
Hi  P3 


Copyright,  1906 

BY 

THE  BANKS  LAW  PUBLISHING  CO. 

COPYBIGHT,    1907 
BY 

THE  BANlvS  LAW  PUBLISHING  CO. 

Copyright,  1908 

BY 

THE  BANKS  LAW  PUBLISHING  CO. 
Copyright,  1909 

BY 

THE  BANKS  LAW  PUBLISHING  CO. 

COPYBIGHT,    1910 
BY 

THE  BANI^S  LAW  PUBLISHING  CO. 
Copyright,  1911 

BY 

THE  BANKS  LAW  PUBLISHmG  CO. 
Copyright,  1912 

BY 

THE  BANKS  LAW  PUBLISHING  CO. 
Copyright,  1913 

BY 

THE  BANI^S  LAW  PUBLISHING  CO. 


("OPYRIGIIT,    1914 

: : . .  Bt^ 

THE  BANKS  LAW  PUBLISHING  CO. 

Copyright,  1915 

BY 

THE  BANKS  LAW  PUBLlfilHING  a). 
Copyright,  191(5 

BY 

THE  BANKS  LAW  PlIIU>ISIIIN[f;  CO. 


Insurance   La\¥   of 
Neyv  York. 


CHAPTER  33  OF  1909. 

AN  ACT  in  relation  to  insurance  corporations,  constituting  chap 

ter  twenty-eight  of  the  consolidated  laws. 

Approved   by  the  Governor  February   17,   1909.     Passed,  three-fifths   being 

present. 

The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly y  do  enact  as  follows: 

CHAPTER  28  OF  THE  CONSOLIDATED  LAWS. 

Insurance  Law. 

Article     1.  General  provisions.     (§§  1-67.) 

2.  Life,  health  and  casualty  insurance  corporations.     (§§  70-108.) 

3.  Fire  insurance  corporations.     (§§  110- 149c.) 

4.  Marine  insurance  corporations.     (§§  150-162.) 

5.  Title  and  credit  guaranty  corporations.     (§§   170-183.) 

5a.  Mutual    Employers'    Liability    and     Workmen's    Compensation 
Corporations.     (§§    185-194.) 

6.  Life  or  casualty  insur.ance  corporations  upon  the  co-operative  or 

assessment  plan.     (§§  200-220.) 

7.  Fraternal  benefit  societies.     (§§  230-249.) 

8.  Corporations  for  insurance  of  domestic  animals.     (§§  250-254.) 

0.  Co-operative  Fire  Insurance  Corporations.      (§§  260-269.) 

10.  Lloyds  and  initer-insurers.     (§§  .300-305.) 

10a.  Mutual  fire  insurance  corporations.     (§§  320-328.) 
10b,  Mutual         automobile         casualty         insurance         corporations. 
m  340-348.) 

11.  Laws  repealed;  construction;  when  to  take  effect.     (§§  360-361.) 

359280 


2  —  Tii:  Insurance  Law. 

AETICLE  I. 
General  Provisions. 

Section    1.  Short  title  and  application. 

2.  The  superintendent  of  insurance. 

3.  Offices  for  insurance  department. 

4.  Seal;  and  certificate,  when  evidence. 
6.  Deputy  superintendent  and  clerks. 

6.  Fees. 

7.  Expenses   of  examinations. 

8.  Expenses  of  department,  how  defrayed. 

9.  Certificate  of  authorization  of  superintendent. 

10.  Certificate    of    attorney -general ;    corporate    names;    number    oi 

directors. 

11.  Examination  by  superintendent. 

12.  Minimum  capital  stock. 

13.  Deposit  of  securities. 

14.  Exchange  of  securities;  interest. 

15.  State  treasurer  to  countersign  transfers  of  securities. 

16.  Investment  of  capital  and  surplus. 

17.  Securities  must  be  interest  or  dividend-paying. 

18.  Stocks,  bonds  and  other  evidences  of  debt. 

19.  Lien  on  stock  and  profits. 

20.  Restrictions  as  to  real  property. 

21.  When  corporation  to  be  deemed  insolvent. 

22.  Reinsurance. 

23.  Reinsurance  by  receiver. 

24.  Limitation  of  risk. 

25.  Jurisdiction  of  superintendent  over  foreign  corporations. 

26.  Deposits  by  insurance  corporations  of  other  states. 

27.  Funds  and  capital  of  insurance  corporations  incorporated  outside 

of  the  United  States. 

28.  Special  deposit  required  in  certain  cases. 

29.  Copy  charter  and  verified  statement  to  be  filed. 

30.  Appointment  of  attorney. 

31.  Certified  copy  of  superintendent's  certificate  to  be  filed  in   thf 

clerk's  office. 

32.  Renewal  of  certificate  of  authority;  revocation. 

33.  Reciprocal  requirements. 

34.  Taxation  of  foreign  corporations. 

35.  Superintendent  to  forward  process. 

36.  Officers    and    directors    not    to    be    pecuniarily    interested    In 

transactions. 

37.  Corporations  heretofore  named. 

38.  Fiduciary  capacity  of  agents. 

39.  Examiners  and  examinations. 


§§  1,  2.  General  Provisions.  3 

Section  40.  Hlxamination    by    superinteudent    upon    reijuest    of    stockholder, 
policyholder  or  creditor. 

41.  Impairment  of  capital. 

42.  Stockholders  to  make  good  impairment  or  deficiency. 

43.  Impaired  mutual  insurance  corporations. 

44.  Reports  of  corporations. 

45.  Forms  of  report  to  be  furnished  by  superintendent. 

46.  Annual  report  of  superintendent. 

47.  Deceptive  statements  prohibited. 

48.  Contents  of  advertisements. 

49.  Agents. 

50.  Agents'  certificate  of  authority. 

51.  Examination  of  securities  deposited  by  officers  of  corporation. 

52.  Reorganization  of  existing  corporations  and  amendment  of  cer- 

tificates. 

53.  General  penalties. 

54.  Conduct  of  insurance  business  by  persons  not  incorporated. 

55.  Insurance  without  the  consent  of  the  insured  prohibited. 
50.  Foreign  insurance  companies. 

57.  Application  of  article  limited. 

58.  Policy  to  contain  the  entire  contract;  statements  of  insured  to 

be  representations  and  not  warranties. 

59.  Certain  provisions  in  policies  prohibited. 

60.  Estimates  and  misrepresentations  prohibited. 

61.  Receiver  to  make  assessment  on  premium  notes. 

62.  Surrender  of  policies  to  receiver. 

63.  Proceedings  against  and  liquidation  of  delinquent  insurance  cor- 

porations. 

64.  Provisions  of  insurance  law  not  to  apply  to  religious  orders. 

65.  Rebating  and  discriminating  prohibited. 

66.  Promotion  of  insurance  corporations;  sale  of  securities. 

67.  Approval  of  premium  rates. 

Section  1.    Short  title  and  application. 

This  chapter  shall  be  known  as  the  "  Insurance  Law,"  and 
shall  be  applicable  to  all  persons,  partnerships,  corporations,  associ- 
ations and  societies  and  to  associations  operating  as  Lloyds,  inter- 
insurers  or  individual  underwriters,  authorized  by  law  to  make 
insurances. 

Source.— Former  §   1   (L.  1892,  chap.  690). 

Amended  by  L.  1912,  chap.  265. 

§  2.    The  superintendent  of  insurance. 

There  shall  continue  to  be  a  separate  and  distinct  department 
charged  with  the  execution  of  the  laws  relatincr  to  insurance,  to 


4  The  Insukance  Law.  §   3. 

be  known  as  the  insurance  department,  the  chief  officer  of  whicli 
shall  be  the  superintendent  of  insurance,  who  shall  be  appointed 
by  the  governor,  by  and  with  the  advice  and  consent  of  the  senate, 
and,  unless  appointed  to  fill  a  vacancy,  shall  hold  his  office  for  the 
term  of  three  years,  beginning  on  the  first  day  of  July  succeeding 
his  appointment,  and  ending  on  the  first  day  of  July  in  the  third 
calendar  year  thereafter;  provided  that  the  term  of -office  of  the 
superintendent  appointed  to  succeed  the  superintendent  who  was 
in  office  on  the  first  day  of  January,  nineteen  hundred  and  twelve, 
shall  continue  until  the  first  day  of  July,  nineteen  hundred  and 
fifteen.  A  vacancy  in  such  office  shall  be  filled  only  for  the  balance 
of  the  unexpired  term.  The  superintendent  shall  receive  an  annual 
salary  of  ten  thousand  dollars,  which  shall  be  in  full  of  all  services 
performed  by  him  in  any  capacity. 

The  superintendent  and  his  deputies  shall  take  and  subscribe 
and  file  in  the  office  of  the  secretary  of  state  the  constitutional 
oath  of  office  within  fifteen  days  from  the  time  of  notice  of  their 
appointments  respectively.  The  superintendent  shall,  within  the 
same  time,  give  an  official  undertaldng  in  the  sum  of  twenty-five 
thousand  dollars,  with  two  good  sureties  to  be  approved  by  the 
comptroller.  !N"either  the  superintendent  nor  any  deputy  nor 
employee  shall  be  directly  or  indirectly  interested  in  any  insur- 
ance corporation,  except  as  an  ordinary  policy-holder. 

Source. — Former  §  2,  as  amended  by  L.  1906,  eliap.  326;  originally  revised 
from  L.  1859,  chap.  366,  §  1,  §  2,  as  amended  by  L.  1873,  chap.  593,  §  5,  and  L. 
1868,  chap.  732,  §  6. 

Amended  by  L.  1912,  chap.  265. 

Letters  of  the  superintendent  are  not  public  documents;  access  to  them 
is  discretionary  with  the  superintendent.  Attorney-General  Rep.,  March  1, 
1807. 

During  the  absence  and  inability  of  the  superintendent,  the  deputy  becomes 
at  once  acting  superintendent  and  his  acts  are  to  all  intents  and  purposes 
those  of  the  superintendent  and  he  is  entitled  to  the  salary  of  that  office  while 
he  so  continues  to  act.    People  ex  rel.  Church  v.  Hopkins,  55  N.  Y.,  74. 

§  3.    Offices  for  insurance  department. 

There  shall  be  assigned  to  the  superintendent  of  insurance,  by 
the  trustees  of  the  oapitol,  suitable  ofiices  in  the  city  of  Albany 


i^^ 


5.  Genekal  Provisions. 


for  conducting  the  business  of  the  insurance  department.  The 
superintendent  shall,  from  time  to  time,  furnish  the  necessary- 
furniture,  stationery,  fuel,  lights  and  other  proper  conveniences 
for  the  transaction  of  such  business,  the  expenses  of  which,  and 
the  rent  of  such  offices,  if  any,  shall  be  paid  on  the  certificate  of 
the  superintendent  and  the  warrant  of  the  comptroller. 

Source. — Former  §  3,  originally  revised  from  L.  1859,  chap.  366,  §  6,  as 
amended  by  L.  1877,  cliap.  423. 

§  4.    Seal  and  certificate,  when  evidence. 

The  seal  of  office  now  used  by  the  superintendent  of  insurance 
shall  continue  to  be  the  seal  of  his  office  and  may  be  renewed 
whenever  necessary.  Every  certificate,  assignment,  conveyance 
or  other  paper  executed  by  him  in  pursuance  of  any  authority 
conferred  by  law  and  sealed  with  such  seal  of  office,  shall  be 
received  as  evidence  and  may  be  recorded  in  the  proper  recording 
offices  in  the  same  manner  and  with  the  like  effect  as  a  deed  regu- 
larly acknowledged  or  proved  before  an  officer  authorized  by  law 
to  take  the  proof  or  acknowledgment  of  deeds. 

Source. — Former  §  4,  originally  revised  from  L.  1859,  chap.  366,  §  4. 

§  5.    Deputy  superintendent  and  clerks. 

The  superintendent  of  insurance  shall  employ  from  time  to  time 
the  necessary  clerks  to  discharge  such  duties  and  to  be  paid  such 
compensation  as  he  shall  prescribe.  He  shall  appoint  one  or  more 
of  such  clerks  to  be  his  deputies.  Tn  case  of  the  absence  of  the 
superintendent  or  his  inability  from  any  cause  to  discharge  the 
powers  and  duties  of  his  office,  the  powers  and  duties  of  the  office 
shall  devolve  upon  his  first  deputy;  and  in  the  absence  of  both  the 
superintendent  and  his  first  deputy  or  their  inability  from  any 
cause  to  discharge  the  powers  and  duties  of  the  office,  the  powers 
and  duties  of  the  office  shall  devolve  upon  his  second  deputy. 

The  compensation  of  the  clerks  of  the  department  shall  be  paid 
to  them  monthly  on  the  certificate  of  the  superintendent  and  on 
the  warrant  of  the  comptroller. 


6  The  Insurance  Law.  §§  6,  7. 

Source. — Former  §  5,  originally  revised  from  L.  1859,  chap.  366,  §  2,  as 
amended  by  L.  1873,  chap.  593. 

Service  of  a  summons  and  complaint  on  a  deputy  is  good  service  on  the 
superintendent  in  the  absence  of  the  superintendent.  Quinn  v.  Royal  Ins. 
Co.,  81   Hun,  207. 

During  the  absence  and  inability  of  the  superintendent,  the  deputy  becomes 
at  once  acting  superintendent  and  his  acts  are  to  all  intents  and  purposes 
those  of  the  superintendent  and  he  is  entitled  to  the  salary  of  that  office 
while  he  so  continues  to  act.    People  ex  rel.  Church  v.  Hopkins,  55  N.  Y.,  74. 

During  a  vacancy  in  the  office  of  superintendent,  the  deputy  has  power  to 
bring  an  action  as  acting  superintendent.     Smyth  v.  Lombardo,  15  Hun,  415. 

§  6.    Fees. 

Every  corporation  or  person  to  whom  this  chapter  shall  be 
applicable  shall  pay  the  following  fees  to  the  superintendent, 
unless  remitted  by  him.  For  filing  the  declaration  and  certified 
copy  of  the  charter  required  by  law,  thirty  dollars.  For  filing  the 
annual  report  required  by  law,  twenty  dollars.  For  each  certifi- 
cate of  authority  and  certified  copy  thereof,  and  for  each  certificate 
of  deposit,  valuation  or  compliance,  not  exceeding  Rve  dollars. 
For  every  copy  of  any  paper  filed  in  his  office,  ten  cents  per  folio; 
and  for  affixing  the  official  seal  on  such  copy  and  certifying  the 
same,  one  dollar.  All  fees,  perquisites  and  moneys  received  by 
the  insurance  department,  or  any  officer  thereof,  shall  be  paid 
into  the  state  treasury  as  required  by  the  state  finance  law. 

Source.— Former  §  6,  as  amended  by  L.  1893^  chap.  725;  originally  revised 
from  L.  1859,  chap.  366,  §  7,  as  amended  by  L.  1871,  chap.  709;  L.  1853,  chap. 
466,  §  27;  L.  1853,  chap.  463,  §  16;  L.  1865,  chap.  328,  §  3;  L.  1868,  cliap.  732, 
§  5;  L.  1883,  chap.  175,  §  15;  L.  1885,  chap.  538,  §  7;  L.  1889,  ohap.  454,  §  9. 

Amended  by  L.  1913,  chap.  304. 

Note. — ^The  purpose  of  the  amendment  of  fhis  section  by  chapter  304  of 
1913  was  to  compel  payment  of  all  receipts  of  the  department  and  other 
receipts  to  the  State  Treasurer. — Ed. 

§  7.    Expenses  of  examinations. 

The  expense  of  every  examination  or  other  investigation  of 
the  affairs  of  an  insurance  corporation,  pursuant  to  tlie  autliority 
conferred  by  tlie  provisions  of  this  chapter,  shall  be  borne  and 
paid  by  the  corporation  so  examined,  unless  remitted  by  the 
ffuperintendeiit. 


§§  8,  9.  General  Provisions.  7 

No  charge  shall  be  made  for  any  examination  of  an  insurance 
corporation  by  the  superintendent  or  his  deputy  personally,  or  by 
one  or  more  of  the  regular  clerks  of  the  department  except  for 
necessary  traveling  and  other  actual  expenses.  All  charges  for 
making  any  examination  and  all  charges  against  an  insurance  cor- 
poration by  an  attorney  or  appraiser  of  the  department  shall  be 
presented  in  the  form  of  an  itemized  bill  approved  by  the  superin- 
tendent, audited  by  the  comptroller,  and  paid  on  his  warrant  drawn 
m  the  usual  maimer  on  the  state  treasurer,  to  the  person  making 
the  examination. 

The  corporation  examined  on  receiving  a  certified  copy  of  such 
bill  so  approved,  audited  and  paid,  shall  repay  the  amount  thereof 
to  the  superintendent  of  insurance,  to  be  by  him  paid  into  the  state 
treasury  to  replace  the  money  drawn  out  as  above  provided.  No 
insurance  corporation,  or  any  officer  or  director  thereof,  shall  either 
directly  or  indirectly  pay  by  way  of  gift,  credit  or  otherwise,  any 
sum  of  money  or  other  valuable  thing  to  the  superintendent  or  any 
clerk  or  employe  of  the  insurance  department  or  any  examiner  for 
extra  service  or  for  purposes  of  legislation,  or  by  way  of  a  loan,  or 
on  any  other  pretense  whatsoever. 

Source. — Former  §  7,  as  amended  by  L.  1898,  chap.  171;  L.  1906,  chap.  326; 
originally  revised  from  L.  1853,  chap.  463,  §  17,  as  amended  by  L.  1879,  chap. 
161;  L.  1859,  chap.  366,  §  2,  as  amended  by  L.  1873,  chap.  593. 

Amended  by  L.  1909,  chap.  301,  and  L.  1910,  chap.  634. 

The  approval  of  a  bill  by  the  superintendent  is  not  conclusive  upon  the 
comptroller,  but  the  latter  has  power  to  examine  and  pass  upon  and  readjust 
a  bill  approved  by  the  superintendent  and  presented  to  him  for  audit  and 
payment  as  prescribed  in  this  section.  Matter  of  Murphy,  24  Hun,  592,  aff'd 
86  N.  Y.,  627. 

§  8.    Expenses  of  department;  how  defrayed. 

Repealed  by  chap.  301  of  1909. 

§  9.    Certificate  of  authorization  of  superintendent. 

No  corporation,  nor  any  individual,  as  principal,  shall  transact 
the  business  of  insurance  within  this  state  without  the  certificate 
of  the  superintendent  of  insurance,  certifying  under  his  hand 
and  official  seal  that  such  corporation  or  individual  has  complied 
with  all  the  requirements  of  law  to  be  observed  by  such  corpora- 


8  The  Insurance  Law.  §  9. 

tion  or  individual  and  that  such  corporation  or  individual  is 
autliorized  to  transact  the  business  of  insurance  specified  therein 
in  this  state.  Sucli  certificate  shall  be  recorded  in  the  ofiice  of 
the  superintendent  in  a  book  to  be  kept  by  him  for  tbat  purpose. 
Xo  corporation  or  individual  shall  transact  in  this  state  any 
insurance  business  not  specified  in  the  certificate  of  authority 
granted  b.v  the  superinteiuleiit.  The  superintendent  may  refuse 
to  issue  any  such  certificate  to  a  doinestic  or  foreign  corporation, 
if,  in  his  judgment,  such  refusal  will  best  promote  the  interests 
of  the  people  of  the  state.  ISTothing  in  this  section  contained 
shall  apply  to  any  insurance  company  organized  prior  to  the  first 
day  of  October,  eighteen  hundred  and  ninety-two,  under  any  gen- 
eral or  special  law  of  this  state  and  carrying  on  business  on  said 
date,  but  every  such  corporation  is  hereby  recognized  as  an  existing 
corporation  and  is  hereby  authorized  to  continue  as  such  corpora- 
tion and  to  continue  sucb  business  until  the  legislature  shall  other- 
wise provide,  subject  to  such  of  the  provisions  of  this  chapter  as 
are  made  applicable  to  such  corporations. 

Source. — Former  §  9,  as  amended  by  L.  1893,  chap.  725;  originally  revised 
from  L.  1849,  chap.  308,  §  11;  L.  1853,  chap.  463,  §  7;  L.  1853,  chap.  406,  §  23, 
as  amended  by  L.  1875,  chap.  555;  L.  1871,  chap.  888,  §  5;  L.  1883,  chap.  175, 
§  3,  as  amended  by  L.  1887,  ohap.  285. 

Amended  by  L.  1910,  chap.  634. 

Note. —  The  purpose  of  the  amen<lment  of  1910  was  to  give  the  superin- 
tendent power  to  refuse  a  certificate  of  authority  not  only  to  a  foreign 
corporation,  but  to  a  doniesitic  corporation,  if,  in  his  judgment,  such  refusal 
would  best  promote  the   interests  of  the  State. —  Ed. 

See  §  1192,  Penal  Law.  Acting  as  agent  of  life  insurance  corporation  with- 
out certificate  of  authority. 

See  §  1197,  Penal  Law.  Misconduct  of  officers  agents  of  co-operative 
insurance  companies. 

See  §  1198,  Penal  Law.  Agents  issuing  policy  after  revocation  of  certificate 
to  do  business. 

CONDITIONS. —  A  state  has  the  right  to  impose  conditions,  not  in  conflict 
with  the  constitution  or  the  laws  of  the  United  States,  to  the  transaction  of 
business  within  its  territory  by  an  insurance  company  chartered  by  another 
state,  or  to  exclude  such  company  from  the  territory,  or,  having  given  a 
license,  to  revoke  it  with  or  without  cause.  Doyle  v.  Continental  Ins.  Co., 
94  U.  S.,  535. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law,  a 
foreign  corporation  includes  one  incorporated  under  llic  laws  of  iiiiolher  state 
of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attoriuy-lienenil  Rep.,  1895, 
page  56. 


§  9.  GEJvTEiiAi.  Provisions.  9 

Certain  charitable  associations  organized  under  chap.  256  of  1881  are 
required  to  file  the  certificate  provided  by  this  section.  Supreme  Council  of 
Chosen  Friends  v.  Fairman,  10  Abb.  N.  C.,  162. 

LODGE  SYSTEM. —  The  fraternal  insurance  associations  organized  on  the 
lodge  system  which  are  exempted  from  the  operations  of  section  9  are  such 
fraternal  insurance  associations  organized  on  the  lodge  system  as  are  provided 
for  in  article  7  of  the  insurance  law.    Attorney-General  Rep.,  1906,  page  553. 

BURIAL  CONTRACTS. —  Corporations  issuing  contracts  to  furnish  burials 
for  contract  holders  upon  payment  of  stipulated  sura  at  execution  of  contract, 
and  a  like  sum  upon  death  of  the  contract  holder,  are  "  transacting  the 
business  of  insurance."  In  re  iBarrett  Co.,  Attorney-General  Rep.,  Feb.  13, 
1903,  i>age  258;  Nov.  19,  1902;  Oct.  17,  1903,  and  March  5,  1908. 

A  corporation,  contracting  with  families  or  individuals  whereby  for  an 
annual  sum,  the  company  agrees  to  supply  a  coffin,  etc.,  would  be  transacting 
the  business  of  insurance.    Ruling  Ins.  Dept.,  Aug.  4,  1911. 

The  adjustment  of  a  loss  by  an  agent  is  not  transacting  business  in  this 
state.     People  ex  rel.  McCall  v.  Gilbert,  44  Hun,  522. 

If  a  foreign  corporation  not  authorized  to  transact  business  in  this  state 
makes  out  policies  in  Jersey  City  upon  applications  received  in  New  York 
and  delivers  the  policies  in  New  York,  such  transactions  constitute  doing 
business  in  that  state  and  such  acts  are  unlawful.  Employers'  Assur.  Corp. 
V.  Employers'  Ins.  Co.,  61  Hun,  552;  41  St.  Rep.,  390;  16  N.  Y.  Supp.,  397. 

A  citizen  of  this  state  is  not  prohibited  from  applying  for  insurance  to  a 
foreign  corporation  which  is  not  authorized  to  transact  business  in  this  state, 
nor  from  receiving  the  policy  here  by  mail;  but  an  agent  of  the  foreign  com- 
pany is  prohibited  from  making  the  delivery.     People  v.  Imlay,  20  Barb.,  68. 

A  trust  company,  which  is  not  an  insurance  company,  cannot  execute  a 
contract  which  iS'  in  the  nature  of  insurance  or  transact  the  business  of 
insurance  in  this  State.     Attorney-General  Rep.,  Dec.  11,  1902. 

VALIDITY  OF  ORGANIZATION.— Persons  who  have  given  premium  notes 
to  a  mutual  insiu-ance  company,  and  have  thus  become  members  of  the 
corporation,  are  not  in  a  condition  to  assail  the  organization  of  the  company. 
Cooper  V.  Shaver,  41  Barb.,  151. 

If  the  company  has,  in  form,  a  charter  authorizing  it  to  act  as  a  body 
corporate,  and  is  in  fact  in  the  exercise  of  corporate  powers  at  the  time  of  tak- 
ing a  promissory  note  from  an  individual,  it  is,  as  to  him  and  all  third  persons, 
a  corporation  de  facto,  and  the  validity  of  its  corporate  existence  can  only 
be  tested  by  proceedings  in  behalf  of  the  people.     Jones  v.  Dana,  24  Barb.,  394. 

ORGANIZATION. —  One  who  has  contracted  with  an  insurance  company 
as  an  existing  corporation,  and  has  executed  a  promissory  note  to  it,  and 
received  a  policy  of  insurance  from  it,  of  which  he  has  enjoyed  the  benefit 
and  protections,  is  not  in  a  condition  to  object  to  the  regularity  and  validity 
of  the  organization  of  the  company.    Hyatt  v.  Esmond,  37  Barb.,  601. 

Parties  who  have  contracted  with  a  corporation  as  such  cannot  afterwards 
raise  the  objection  that  the  company  was  not  legally  incorporated;  if  there 
are  any  defects  in  the  organization  of  a  company,  they  will  be  cured  by  a 
subsequent  act  of  the  legislature,  which  treats  it  as  an  existing  corporation 
and  changes  its  name.     White  v.  Coventry,  29  Barb.,  305. 


10  The  Insurance  Law.  §  9. 

DISCRETION  OF  SUPERINTENDENT.— Under  the  provisions  of  chap. 
593  of  1873,  the  superintendent  had  the  right  to  refuse  to  permit  any  foreign 
corporation  to  transact  business  in  this  state,  whenever,  in  his  judgment, 
such  refusal  to  admit  it  would  best  promote  the  interests  of  the  people; 
a  similarity  of  name  as  would  likely  lead  to  confusion  between  the  business 
of  a  foreign  corporation  and  another  company  is  a  sufficient  ground  for 
refusal.     Employers'  Assur.  Corp.  v.  Employers'  Ins.  Co.,  78  Hun,  446. 

The  superintendent  of  the  insurance  department  may,  in  his  discretion, 
issue  to  a  foreign  credit  guarantee  insurance  company  a  certificate  authoriz- 
ing it  to  transact  business  in  this  state.  Attorney-Ge'neral  Rep.,  1892,  page 
375. 

Tlie  suporinti'ndent  has  the  riglit  to  refuse  to  renew  the  license  of  a  ioreign 
company  unless  it  complies  with  the  statute.  In  re  General  Ace.  Ins.  Co., 
Attorney-General  Rep.,  Jan.  8,   1906. 

Where  the  receiver  of  an  insurance  company,  dissolved  by  an  order  of  the 
court,  entered  into  a  contract  with  a  foreign  insurance  company  for  reinsur- 
ance, which  contract  was  approved  by  an  order  of  the  court,  the  foreign 
corporation  is  estopped  from  alleging,  in  its  own  defense,  that  the  contract 
was  made  in  violation  of  the  laws  of  this  state.  Jay  v.  De  Groot,  2 
Hun,  205. 

An  insurance  policy  is  not  void  because,  by  its  terms,  it  extends  beyond  a 
time  limited  by  the  charter  of  the  company  for  its  corporate  existence. 
Huntley  v.  Merrill,  32  Barb.,  626. 

An  agreement  for  reinsurance  with  a  foreign  unauthorized  company  is  not 
void  if  executed.     Casserly  v.  Manners,-  9  Hun,  695. 

Where  the  president  of  an  insurance  company,  knowing  that  the  statutory 
prerequisites  to  its  organization  have  not  been  complied  with,  issues  and 
signs  policies  and  places  them  in  the  hands  of  agents,  who,  to  his  knowledge, 
induce  people  to  take  them,  representing  that  the  laws  authorizing  the 
company  to  transact  business  have  been  complied  with,  he  is  guilty  of  a 
fraud,  and  an  action  lies  against  him  to  recover  back  the  money  so  paid. 
Belding  v.  Floyd,  17  Hun,  208. 

DEMURRER. —  A  complaint  in  an  action  brought  by  a  foreign  insurance 
company  is  not  demurrable  for  its  failure  to  show  that  it  has  been  duly 
authorized  to  do  business  in  this  state,  the  failure  to  comply  being  a  matter 
of  defense.     Thompson  v.  Colonial  Assur.   Co.,  33  Misc.,  37. 

POWERS. —  An  insurance  company,  in  the  absence  of  a  restriction  imposed 
by  statute,  have  the  power  necessary  to  enable  them  to  transact  the  business 
authorized  by  their  charter;  they  may  borrow  money  for  the  purposes  of 
their  business,  and  for  like  purposes  may  procure  sureties  whose  contracts 
of  indemnity  are  valid,  the  same  as  if  made  with  individuals.  Hope  Ins. 
Co.  v.  Perkins,  38  N.  Y.,  404. 

DEPOSIT. —  Foreign  life  insurance  companies  seeking  to  do  business  here 
must  deposit  with  the  superintendent  of  insurance  at  least  $200,000,  but 
are  not  required  to  have  their  capital  fully  paid  in.  In  re  North  Araer. 
Life  Ins.  Co.,  Attorney-General  Rep.,  1900,  page  178. 


§  10.  General  Provisions.  11 

MANDAMUS. —  Mandamus  will  not  lie  to  compel  the  superintendent  to  do 
an  act  regarding  the  admission  to  this  state  of  a  foreign  insurance  company. 
People  ex  rel.  Equitable  Ins.  Co.  v.  Fairman,  12  Abb.  N.  C,  268. 

Mandamus  will  not  lie  to  compel  the  superintendent  to  issue  a  renewal 
certificate  to  a  foreign  company.  People  ex  rel.  Hartford  Ins.  Co.  v.  Fairman, 
12  Abb.  N.  C,  252. 

AGENTS. —  Corporations  may  act  as  agents  for  insurance  companies  when 
expressly  authorized  so  to  do  by  their  charters,  and  not  otherwise.  In  re 
Carpenter   &  Co.,  Attorney -General   Rep.,   1893,  page  369. 

§  10.    Certificate  of  attorney-general;  corporate  names; 
number  of  directors. 

When  application  is  made  to  the  superintendent  of  insurance 
by  any  persons  desiring  to  become  incorporated  as  an  insurance 
corporation,  or  for  authority  to  transact  the  business  of  insurance 
in  this  state,  under  or  pursuant  to  any  declaration  and  charter 
presented  for  filing  in  the  insurance  department,  or  any  amended 
declaration  or  charter  required  by  law  to  be  filed,  or  to  be  approved 
by  the  superintendent,  the  superintendent  shall  not  file  such  decla- 
ration and  charter  or  grant  such  certificate  of  authority  until 
such  declaration  and  charter  shall  have  been  examined  by  the 
attorney-general;  and  certified  by  him  to  tiie  superintendent  to 
be  in  accordance  with  the  requirements  of  law.  'No  certificate 
of  authority  to  transact  the  business  of  insurance  in  this  state, 
shall  be  granted  by  the  superintendent  of  insurance  to  any  insur- 
ance corporation  hereafter  applying  therefor,  if  such  corporation 
has  the  same  name  as  another  corporation  authorized  to  transact 
such  business  in  this  state  at  the  time  of  granting  such  certificate, 
or  a  name  so  nearly  resembling  it  as  to  be  calculated  to  deceive.  %y^ 
The  certificate  of  incorporation  of  a  domestic  insurance  corpora- 
tion hereafter  organized  shall  contain  a  provision  that  the  number 
of  directors  shall  in  no  case  be  less  than  the  minimum  number  of 
incorporators  required  under  this  chapter  to  organize  such  a  cor- 
poration. The  number  of  directors  of  a  domestic  insurance 
corporation  heretofore  organized  shall  not  be  less  than  the  number 
specified  in  the  certificate  of  incorporation,  except  that  the  number 
of  directors  of  such  domestic  insurance  corporation  may  be  reduced 
to  the  minimum  number  of  incorporators  required  under  this 


12  The  Insurance  Law.  §  11. 

chapter  to  organize  such  corporation;  such  reduction  to  be  made 
pursuant  to  the  provisions  of  the  stock  corporation  law  relating 
to  the  proceedings  to  be  taken  for  the  reduction  of  the  number  of 
directors  of  any  stock  corporation. 

Source.— Former  §  10,  as  amended  by  L.  1893,  chap.  725;  L.  1898,  chap.  171, 
and  L.  1900,  chap.  366;  originally  revised  from  L.  1849,  chap.  308,  §  11;  L. 
1853,  chap.  403,  §  4;  L.  1853,  chap.  466,  §  10;  L.  1883,  chap.  175,  §  3,  as 
amended  by  L.  1887,  chap.  285;  L.  1889,  chap.  454,  §  3. 

See  §  60,  General  Corporation  Law.    Change  of  name  of  corporation. 
See  §  6,  General  Corporation  Law,  chap.  28  of  1909.    Similarity  of  corporate 
names. 

SAJME  NAME. —  The  superintendent  of  insurance  may  issue  a  certificate  of 
authority  to  do  business  to  a  stock  corporation  having  the  same  name  as  a 
mutual  corporation,  theretofore  authorized  to  do  business,  on  the  surrender 
and  cancellation  of  the  certificate  issued  to  the  mutual  corporation.  In  re 
Life  Assn.  of  America,  Attorney-General  Rep.,  1901,  page  187. 

Evidence  of  dissolution  must  be  established  Iwfore  a  cor.poration  can  adopt 
a  similar  name.     Attorney-General  Rep.,  Jan.   9,   1906. 

Certificate  of  incorporation  must  contain  definite  number  of  directors. 
Attorney-General  Rep.,  June  21,   1904. 

Certificate  of  incorporation  must  set  forth  time  when  directors  and  officers 
are  elected.     Attorney-General  Rep.,  May  26,  1911. 

MANDAMUS. —  Mandamus  will  not  lie  to  compel  the  attorney-general  to 
certify  the  charter  and  declaration  of  a  proposed  insurance  company  when 
the  declaration  stated  the  proposed  business  of  the  company,  among  other 
things,  to  be  "  the  inspection  and  certification  as  to  the  sanitary  conditions  of 
buildings  and  premises,"  as  such  business  is  not  insurance.  People  ex  rel. 
Woodward  v.  Rosendale,  142  N.  Y.,  126,  aff'g  76  Hun,  103. 

CHANGE  OF  NAME.— In  re  Locomotion  F.  B.  H.  &  A.  Assn.  Attorney- 
General  Rep.,  1903,  page  402. 

Where  it  appears  that  a  foreign  corporation  has  been  doing  an  unauthorized 
business  in  this  state  under  a  name  similar  to  that  of  a  domestic  corporation, 
the  court  will  restrain  the  foreign  corporation  from  continuing  its  business 
in  this  state.    Employers'  Assur.  Corp.  v.  Employers'  Ins.  Co.,  61  Hun,  552. 

Before  one  insurance  company  can  recover  in  an  action  brought  against 
another  insurance  company  to  restrain  the  use  of  certain  words  as  a  part  of 
its  corporate  name  by  the  latter  company  or  in  its  business,  the  plaintiff  must 
show  tliat  the  defendant  was  issuing  policies  in  violation  of  the  law  of  the 
State,  and  that  its  acts  had  actually  caused  some  special  injury,  or  would 
necessarily  cause  injury,  to  the  plaintiff's  business.  Employers'  Assur.  Corp. 
V.  Employers'  Ins.  Co.,  78  Hun,  446. 

§  11.    Examination  by  superintendent. 

If  the  declaration  and  charter  specified  in  the  preceding  section 
shall  be  approved  by  the  attorney-general,  the  superintendent 
shall  thereupon  cause  an  examination  to  be  made  by  himself  or 


§11.  General  Peo visions.  13 

by  one  or  more  competent  and  disinterested  persons  specially 
appointed  by  him  for  that  purpose,  into  the  affairs  of  the  corpora- 
tion or  proposed  corporation.  If  such  persons,  after  examination 
made,  shall  certify  under  oath,  if  it  be  a  stock  corporation,  that 
the  amount  of  capital  required  by  law  has  been  paid  in  and  is  pos- 
sessed by  it  in  cash,  or  is  invested  in  the  manner  required  by  law; 
or  if  a  mutual  or  co-operative  corporation,  that  it  has  received  and 
is  in  actual  possession  of  the  capital,  premiums  or  engagements  of 
insurance  to  the  full  extent  required  by  law,  the  superintendent 
shall  file  such  certificate  in  his  department.  Every  such  insur- 
ance corporation  shall  also  deposit  with  the  superintendent  of 
insurance,  before  receiving  authority  to  transact  business  in  this 
state,  such  sums  of  money  or  securities  as  may  be  required  by  law. 

Source.— Former  §  11,  as  amended  by  L.  1893,  chap.  725,  and  L.  1906, 
chap.  326;  originally  revised  from  L.  1849,  chap.  308,  §  11. 

See  §  28,  post.  Special  deposit  required  by  certain  foreign  insurance 
companies  before  receiving  authority  to  transact  business  in  this  state. 

DEPOSIT. —  It  is  the  policy  of  our  Insurance  Law  to  require  foreign 
insurance  companies  to  deposit  approved  securities  with  the  Superintendent 
of  Insurance,  as  a  condition  precedent  to  the  transaction  of  business  here. 
Attorney-General  Rep.,  1894,  page  201. 

A  foreign  life  insurance  company  may  deposit  with  the  superintendent  of 
insurance  bonds  of  the  government  under  which  it  is  organized,  provided 
such  government  accepts  from  our  insurance  companies  seeking  to  do  business 
there  government  bonds  of  the  United  States  or  of  this  state.  In  re  Holland, 
etc.,  Bonds.    Attorney-General  Rep.,  1893,  page  242. 

CAPITAL  STOCK. —  The  capital  stock  of  foreign  credit  guarantee  com- 
panies must  be  paid  in  in  cash,  one-third  thereof  within  one  year,  and  the 
other  two-thirds  thereof  within  two  years  from  their  incorporation.  In  re 
Nat.  Credit  Ins.  Co.,  Attorney-General  Rep.,  1893,  page  164. 

The  examiners  are  not  compelled  to  do  more  than  to  state  the  facts  in  their 
report  on  which  the  superintendent  is  to  determine  whether  the  assets  of -the 
corporation  are  sufficient  to  justify  its  continuance  in  business.  People  ex  rel. 
Long  Island  Mutual  v.  Payn,  26  App.  Div.,  584;  60  N.  Y.  Supp.,  334. 

The  superintendent  of  insurance  upon  examination  cannot  recognize  an 
issue  of  stock  until  the  proceedings  to  increase  the  capital  stock  are  com- 
pleted and  the  stock  paid;  sudh  proceedings  should  be  completed  within  a 
reasonable  time  after  its'  eommencement.    Attorney-General  Rep.,  Oct.  10,  1900. 

WITHDRAWALS. —  Insurance  companies  retiring  from  business  may  with- 
draw from  deposit  with  the  superintendent  of  insurance  all  securities  in 
excess  of  an  amount  sufficient  to  secure  policyholders  in  the  United  States. 
In  re  Fire  Ins.  Assn.    Attorney-General  Rep.,  1893,  page  216. 

A  deposit  of  funds  with  the  superintendent  cannot  be  assigned.  In  re 
Cred.  Guar.  Co.,  Attorney-General  Rep.,  1894,  page  223. 


14  The  Insurance  Law.  §  12. 

§  12.    Minimum  capital  stock. 

No  domestic  fire  or  marine  stock  insurance  corporation  shall  be 
nereafter  organized  with  a  smaller  capital  stock  than  two  hundred 
thousand  dollars  fully  paid  in  in  cash,  but  nothing  in  this  section 
contained  shall  be  understood  to  relate  to  the  class  of  corporations 
provided  for  in  articles  nine  or  ten  of  this  chapter. 

A  domestic  stock  insurance  corporation  having  the  power  to 
transact  the  kind  of  insurance  business  described  in  subdivisions 
one,  two,  five,  six,  seven,  eight,  nine  and  ten  of  section  seventy 
of  this  chapter  shall  not  be  hereafter  organized  with  a  smaller 
capital  stock  than  one  hundred  thousand  dollars  fully  paid  in 
in  cash.  A  domestic  stock  insurance  corporation  having  the 
power  to  transact  any  kind  of  insurance  business  described  in 
subdivisions  three  or  four  of  section  seventy  of  this  chapter  shall 
not  be  hereafter  organized  with  a  smaller  capital  stock  than  two 
hundred  and  fifty  thousand  dollars  fully  paid  in  in  cash  if 
authorized  to  transact  any  kind  of  insurance  business  described  in 
one  of  such  subdivisions  or  a  smaller  capital  stock  than  five 
hundred  thousand  dollars  fully  paid  in  in  cash  if  authorized  to 
transact  the  kinds  of  insurance  business  described  in  both  such 
subdivisions.  Except  as  to  the  requirements  of  a  minimun) 
capital  stock  for  the  transaction  of  the  kinds  of  insurance  business 
described  in  subdivisions  three  or  four  of  section  seventy  of  this 
chapter  every  domestic  stock  insurance  corporation  hereafter 
organized  having  power  to  transact  business  under  more  than  one 
subdivision  of  such  section  shall,  in  addition  to  the  minimum 
capital  stock  prescribed  in  this  section,  have  an  additional  capital 
stock  of  fifty  thousand  dollars  fully  paid  in  in  cash,  for  every 
kind  of  insurance  business  more  than  one  which  it  is  authorized 
to  transact.  Any  corporation  to  which  this  section  is  applicable 
shall  also,  at  the  time  of  its  organization,  have  a  surplus  equal  to 
fifty  per  centum  of  its  capital  stock,  which  surplus  shall  also  be 
fully  paid  in  in  cash;  provided  that  this  requirement  shall  not 
apply  to  existing  corporations  reincorporated. 

Source. — Former  §  12,  and  L.  1899,  chap.  85,  §  1;  originally  revised  from  L. 
1840,  chap.  308,  §  5;  L.  1853,  chap.  463,  §  6,  as  amended  by  L.  1881,  chap.  5(50; 
L.  1853,  chap.  460,  §  6,  as  amended  by  L.  1862,  chap.  367;  L.  1865,  chap.  328. 
§  2;  L.  1877,  chap.  200,  §  1.  as  amended  by  L.  1878,  chap.  ,337. 

Amondnd  by  L.   lOKi.  din  p.  634,  and  L.  1013,  chap.  02. 

jq^ote. — The  purpose  of  the  amendment  of  this  section  by  chapter  02  of  1913 
was  to  compel  companies  carrying  on  the  business  of  employer's  liability  in- 


§  13.  General  Provisions.  15 

surance,  and  fidelity  and  surety  insurance  to  possess  a  minimum  ea.pital  of 
$250,000  for  each  of  these  lines.—  Ed. 

This  section,  before  it  was  amended  by  L.  1913,  chap.  92,  was  intended  to  be 
a  consolidation  of  former  §  12  of  the  Insurance  Law  (L.  1892,  chap.  690),  and 
L.  1889,  chap.  85,  §  1.  The  latter  act  was  repealed  by  the  present  Insurance 
Law,  and  was  a  separate  statute  relating  to  the  minimum  capital  stock  re- 
quired for  the  organization  of  Fire  or  Marine  Insurance  Corporations.  It  was 
supposed  to  supersede  §  111  of  this  Law,  at  least  as  to  Fire  or  Marine  Com- 
panies, and  does  not  seem  to  have  been  replaced  by  any  provision  of  the  Con- 
solidated Laws,  but  as  there  was  some  question  whether  said  L.  1889,  chap. 
85,  was  repealed  by  the  present  Insurance  Law,  because  of  the  enactment  of  L. 
1909,  chap.  596,  it  was  specifically  repealed  by  L.  1913,  ohap.  27,  and  as  a 
result  §  111  of  the  Insurance  Law,  relating  to  the  incorporation  of  Mutual 
Fire  Insurance  Companies  is  unquestionably  in  force. 

CAPITAL  STOCK. —  As  the  law  of  this  state  requires  that  a  domestic  fire 
and  marine  insurance  company  shall  have  at  least  $200,000  capital  stock,  it 
would  be  unjust  to  permit  a  foreign  company  to  do  such  business  here  with 
less  capital.    Attorney -General  Kep.,  1897,  page  112. 

Foreign  life  insurance  companies  seeking  to  do  business  here  must  deposit 
with  the  superintendent  of  insurance  at  least  $200,000,  but  are  not  required 
to  have  their  capital  fully  paid  in.  In  re  North  Amer.  Life  Ins.  Co.,  Attorney- 
General  Rep.,  1900,  page  178. 

A  foreign  fire  insurance  company  need  not  have  its  maximum  capital  stock 
paid  before  it  is  allowed  to  do  business  in  this  state.  In  re  Nat.  Fire  Ins. 
Co.,  Attorney-Ceneral  Rep.,   1897,   page  234. 

The  capital  stock  of  fire  insurance  companies  of  other  states  must  be  fully 
paid  up  before  such  companies  can  be  authorized  to  do  business  here. 
Attorney-General  Rep.,  1893,  page  336. 

§  13.    Deposit  of  securities. 

Every  deposit  made  with  the  superintendent  of  insurance  by 
any  domestic  or  foreign  insurance  corporation,  shall  be  in  the 
stocks  or  bonds  of  the  United  States  or  of  this  state  or  in  the  bonds 
of  a  county  or  incorporated  city  in  this  state,  authorized  to  be 
issued  by  the  legislature,  not  estimated  above  their  par  or  their 
current  market  value.  Such  deposit  may  be  made  by  an  insurance 
cor|:)oration  incorporated  under  the  laws  of  another  state  of  the 
United  States  in  the  stocks  or  bonds  of  such  state  or  in  the  bonds 
of  a  county  or  incorporated  city  therein  authorized  to  be  issued 
by  the  legislature,  not  estimated  above  their  par  or  their  current 
market  value;  provided  that  similar  domestic  insurance  corpora- 
tions doing  business  in  such  state  are  authorized  by  the  laws 
thereof  to  deposit  or  hold  as  security  therein  for  the  benefit  or 
security  of  their  policyholders  and  creditors  in  such  state  like 
securities  of  this  state.  Such  deposit  may  be  made  by  an  insur- 
ance corporation  incorporated  under  the  laws  of  a  country  outside 


16  The  Insurance  Law.  §  13. 

of  the  United  States  authorized  to  do  business  in  this  state  in  the 
stocks  or  bonds  of  such  country  or  of  any  province  or  city  therein, 
or,  if  any  securities  other  than  those  above  named  are  offered  as 
a  deposit,  they  may  be  accepted  at  such  valuation  and  on  such  con- 
ditions as  the  superintendent  of  insurance  may  direct,  provided 
that  similar  domestic  insurance  corporations  doing  business  in 
such  country  outside  of  the  United  States  are  authorized  by  the 
laws  thereof  to  deposit  or  hold  as  security  therein  for  the  benefit 
or  security  of  their  policyholders  and  creditors  in  such  country 
the  stocks  or  bonds  of  the  United  States,  the  stocks  or  bonds  of 
this  state  or  of  any  county  or  incorporated  city  in  this  state  and 
securities  of  the  same  general  character  as  those  which  are  offered 
for  deposit  in  the  insurance  department;  and  provided,  further, 
that  if  any  country  makes  a  deduction  from  the  value  of  the 
securities  deposited  by  similar  domestic  corporations  a  similar 
deduction  shall  be  made  from  the  securities  deposited  in  the  insur- 
ance department  by  corporations  incorporated  under  the  laws  of 
such  country.  If  the  market  value  of  any  of  the  securities  which 
have  been  deposited  by  any  company  shall  decline  below  that  at 
which  they  were  deposited,  the  superintendent  of  insurance  shall 
call  upon  the  company;  to  make  a  further  deposit,  so  that  the 
market  value  of  all  securities  deposited  by  any  such  company 
shall  be  equal  to  the  amount  which  it  is  required  to  deposit. 

All  deposits  heretofore  made  pursuant  to  this  chapter,  and  all 
deposits  which  shall  or  may  hereafter  be  made  pursuant  thereto, 
and  the  proceeds  thereof,  shall  be  held  in  trust  according  to  the 
law  relating  thereto  without  preference  or  priority  for  or  on 
account  of  any  cause  or  causes  whatsoever  to  any  beneficiary  en- 
titled to  share  therein. 

Source. — Former  §  13,  as  amended  by  L.  1893,  chap.  725;  originally  revised 
from  L.  1851,  chap.  95,  §§  1,  2;  L.  1853,  chap.  453,  §  14,  as  amended  by  L.  1862, 
chap.  300;  L.  1877,  chap.  439,  §  1,  as  amended  by  L.  1881,  chap.  628;  L.  1881, 
chap.  600,  §  1;  L.  1888,  chap.  517,  §  1. 

Amended  by  L.  1910,  chap.  634,  and  L.  1914,  chap.  102.  In  effect  April  3, 
1914. 

The  amondmcnt  of  1910,  cliap.  6.34,  olirainatod  mortn'a.urc  loans  on  ini])rovod 
realty  as  authorized  deposits  for  domestic  companies. 

The  amendment  of  this  section  by  chapter  102  of  1914  added  the  last 
paragraph. 

See  §5  17,  27,  28,  post.    As  to  deposit  of  securities. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  insurance  law  a 

foreitrn  eorporation  inehides  one  ineorjx)rated  under  flw  laws  of  :ino|li(>r  stale 
of  the  United  States.  In  re  Penn.  Kire  Ins.  Co.,  AHoincx Ccnnal  INi).,  IS!),"), 
page  66. 


§   13.  General  Provisions.  17 

It  is  the  policy  of  our  insurance  law  to  require  foreign  insurance  companies 
to  deposit  approved  securities  with  the  superintendent  of  insurance,  as  a 
condition  precedent  to  the  transaction  of  business  here.  Attorney-General 
Rep.,  1894,  page  201. 

A  foreign  life  insurance  company  may  deposit  with  the  superintendent 
of  insurance  bonds,  of  the  aovornmont  und'or  wliioh  it  is  orojanized,  prnvidod 
such  government  accepts  from  our  insurance  companies  seeking  to  do  bua> 
npss  hore  govornmcnt  bondls  of  the  Ignited  Statos  or  of  this  state  Tn  re  TTol- 
land,  etc.,  Bonds,  Attorney- General  Rep.,  1893,  page  242. 

INVESTMENTS. —  Investment  of  the  surplus  assets  and  funds  may  be 
made  in  dividend-paying  stock  of  solvent  trust  companies  in  this  or  otiior 
states.     Attorney-lGeneral  IJej).,  1890,  pape  278.      (But  see  §  100.) 

Under  the  provisions  of  section  13  of  the  insurance  law,  the  deposit 
required  to  be  made  by  section  71  must  be  of  the  class  of  securities  Get  forth 
in  said  section  13  and  not  in  cash,  and  the  superintendent  of  insurance  is  not 
authorized  to  retain  the  accrued  interest  in  order  to  make  good  any  impair- 
ment in  the  amount  of  the  deposit  required.  Attorney-General  Rep.,  1906, 
page  537. 

Investment  of  reserve  fund  of  domestic  insurance  company  in  stocks  and 
bonds.     Attorney-General  Rep.,  1901,  page  240. 

Investments  made  by  foreign  insurance  corporations  must  be  of  the  same 
class  and  kind  required  of  domestic  companies.  In  re  Guar.  Finance  Co., 
Attorney-General  Rep.,  1897,  page  325. 

EXCHANGE  OF  SECURITIES.—  In  the  exchange  of  securities,  those  should 
only  be  accepted  at  their  par  value  or  of  equal  par  and  market  value  with 
those  exchanged  for.  In  re  Continental  Ins.  Co.,  Attorney-General  Rep., 
1896,  page  279. 

A  life  insurance  company  may  not  subscribe  for  new  bonds,  investment  in 
which  is  prohibited  by  §  100  under  rights  as  holders  of  old  bonds.  Right  to 
exchange  bonds  discussed.     Attorney-General  Rep.,  July  22,  1907. 

SURRENDER  OF  SECURITIES.— Superintendent  of  insurance  should  not 
surrender  the  securities  on  deposit  in  insurance  department  for  the  benefit 
of  policyholders  in  the  United  States.  In  re  Baloise  Fire  Ins.  Co.,  Attorney- 
General  Rep.,  1903,  page  424. 

RECEIVER. —  A  receiver  of  an  insolvent  insurance  company  is  not  entitled 
to  have  transferred  to  him  the  securities  deposited  by  the  company  with 
the  superintendent  of  the  insurance  department.  'Matter  of  Guardian  Mut. 
Life  Ins.  Co.,  13  Hun,  115;   alTirmed,  74  N.  Y.,  617. 

An  order  directing  the  issuing  of  a  writ  of  mandamus  requiring  the  super- 
intendent to  deliver  to  a  receiver  of  an  insolvent  insurance  corporation  the 
securities  in  his  hands,  was  improperly  granted;  the  distribution  is  to  be 
made  by  the  superintendent  himself.  People  ex  rel.  R'uggles  v.  Chapman, 
64  N.  Y.,  557. 

The  receiver  of  an  insolvent  life  insurance  corporation,  appointed  in  an 
action  brought  by  a  creditor  and  stockholder,  under  the  provisions  of  the 
Revised  Statutes,  to  procure  its  dissolution  and  a  distribution  of  its  assets 
has  no  authority  to  require  from  the  superintendent  the  securities  deposited 
with  him.     Ruggles  v.  Chapman,  59  N.  Y.,  163 

EXCESS  DEPOSITS.— Excess  deposits,  form  of  delivery  of,  to  surety 
companies  by  8uperintendei>t  of  insurance.  Attorney-General  Rep.,  1903, 
page  489. 


18  The  Insurance  Law.  §  14. 

Excess  deposits  should  not  be  withdrawn  *'  until  all  the  conditions  of  the 
trust  have  been  complied  with."    Attorney-General  Kep.,  1903,  page  476. 

When  a  greater  sum  than  $200,000  is  deposited,  it  is  held  by  the  super- 
intendent on  the  same  terms  as  the  $200,000,  and  the  excess  over  that  amount 
cannot  be  withdrawn  until  all  the  conditions  of  the  trust  have  been  com- 
plied with.    L.  Ins.  Co.  v.  Maxwell,  131  N.  Y.,  286. 

ESTOPPEL. —  Where  the  superintendent  has  accepted  from  an  insurance 
company  an  assignment  of  a  mortgage  as  a  part  of  the  deposit,  on  the  faith 
of  a  representation  on  the  part  of  the  mortgagor  that  there  is  no  legal  or 
equitable  defense  to  the  same,  he  can  avail  himself  of  the  doctrine  of 
estoppel  prohibiting  a  debtor,  upon  the  faith  of  whose  statements  an  assign- 
ment of  his  obligation  has  been  accepted,  from  disputing  such  statements. 
Smyth  V.  Munroe,  84  N.  Y.,  354;  afl'g  19  Hun,  550. 

An  offer  of  a  mortgagor  to  prove,  under  his  answer  in  foreclosure,  that 
at  the  time  the  mortgagee,  a  domestic  insurance  company,  made  the  loan 
on  his  premises,  they  were  incumbered  and  not  worth  fifty  per  centum  more 
than  the  loan,  presents  no  defense  to  the  action.  Washington  L.  Ins.  {3o.  v. 
Clason,  162  N.  Y.,  305. 

.  The  superintendent  has  power  to  foreclose  a  mortgage  deposited  with  him; 
if,  at  the  time  of  the  assignment  of  the  mortgage,  the  mortgagor  signed  a 
certificate  consenting  to  the  assignment,  stating  that  the  whole  principal 
sum,  with  interest,  is  due  and  that  there  was  no  defense  against  the  mort- 
gage, such  mortgagor  will  be  estopped  from  setting  up  the  defense  ol 
usury.    Smyth  v.  Lombardo,  15  Hun,  415. 

RETURN  OF  SECURITIES.— In  the  matter  of  returning  to  the  depositors 
the  securities  which  were  deposited  with  the  superintendent  of  insurance 
as  condition  precedent  to  insurance  business.  In  re  People's  Life  Insurance 
Company,  Attorney -General  Rep.,  1896,  page  133. 

ASSIGNMENT. —  A  deposit  of  funds  with  the  superintendent  cannot  b« 
assigned.    In  re  Cred.  Guar.  Co.,  Attorney-General  Rep.,  1894,  page  223. 

§  14.    Exchange  of  securities;  interest. 

The  stocks  and  securities  deposited  with  the  superintendent  of 
insurance,  pursuant  to  the  provisions  of  this  chapter,  or  heretofore 
deposited  with  him,  may  be  exchanged  from  time  to  time  for  other 
securities  receivable  as  provided  in  this  chapter,  and  so  long  as 
the  corporation  depositing  the  securities  shall  continue  solvent  and 
comply  with  the  laws  of  the  state  it  shall  be  permitted  by  the 
superintendent  to  collect  the  interest  or  dividends  on  such  deposits. 

Source. — Former  §  14,  originally  revised  from  L.  1851,  chap.  95,  §  2;  L.  1853, 
chap.  463,  §  6,  a;8  amended  by  L.  1881,  chap.  560;  L.  1853,  chap.  466,  §  23,  as 
amended  by  L.  1875,  chap.  555;  L.  1888,  chap.  517,  §  2. 

The  interest  collected  upon  the  securities  follows  the  principal,  and  as  a 
receiver  of  an  insolvent  insurance  corporation  cannot  take  possession  of  tlie 
principal,  he  cannot  obtain  possession  of  the  interest  collected  thereon. 
IVoplo  v.  Insnraneo  Co.,  147  N.  Y.,  25;   rov'g  87  Hun,  220. 


§§   15,  16.  General  Provisions.  19 

§  15.    State  treasurer  to  countersign  transfers  of  securities 

No  transfer  of  securities  held  by  the  superintendent  of  insur- 
ance shall  be  valid  unless  countersigned  by  the  treasurer  of 
the  state  or  his  deputy,  and  upon  notice  of  at  least  five  days  to  the 
corporation  depositing  such  securities.  The  treasurer  shall  keep 
in  his  office  or  in  the  office  of  the  superintendent  a  book  in  which 
shall  be  entered  the  name  of  the  corporation  from  whose  account 
such  transfer  of  securities  is  made  by  the  superintendent,  the 
name  of  the  transferee  unless  made  in  blank,  the  par  value  of  the 
securities  transferred,  the  amount  for  which  every  mortgage  trans- 
ferred is  held  by  the  superintendent;  and  within  five  days  after 
coimtersigning  and  entering  the  same,  the  treasurer  shall  advise 
by  mail  the  corporation  from  whose  account  such  transfer  is  made, 
of  the  kind  of  security  and  the  amount  of  the  same  thus 
transferred. 

The  treasurer  shall  have  access  at  all  times  during  office  hours 
to  the  books  of  the  superintendent  of  insurance  for  the  purpose  of 
ascertaining  the  correctness  of  any  transfer  or  assignment  pre- 
sented to  him  to  countersign  and  the  superintendent  shall  have 
access  during  office  hours  to  the  book  herein  mentioned  kept  by  the 
treasurer  to  ascertain  the  correctness  of  the  entries  upon  the  same. 

The  treasurer  shall  state  in  his  annual  report  to  the  legislature 
the  total  amount  of  such  transfer  or  assignment  countersigned 
by  him. 

Source. — Former  §  15,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1868,  oliap.  732. 

§  16.    Investment  of  capital  and  surplus. 

The  cash  capital  of  every  domestic  insurance  corporation  re- 
quired to  have  a  capital,  to  the  extent  of  the  minimum  capital 
required  by  law,  shall  be  invested  and  kept  invested  in  the  stocks 
or  bonds  of  the  United  States  or  of  this  state,  not  estimated  above 
their  current  market  value,  or  in  the  bonds  of  a  county  or  incor- 
porated city  in  this  state  authorized  to  be  issued  by  the  legislature, 
not  estimated  above  their  par  value  or  their  current  market  value, 
or  in  bonds  and  mortgages  on  improved  unencumbered  real  prop- 
erty in  this  state  worth  fifty  per  centum  more  than  the  amount 
loaned  thereon.  The  cash  capital  of  every  foreign  insurance  cor- 
poration to  the  extent  of  the  minimum  capital  required  of  a  like 
domestic  corporation  shall  be  invested  and  kept  invested  in  the 


20  The  Insukance  Law.  §  16. 

same  class  of  securities  specified  for  domestic  insurance  corpora- 
tionsj  except  that  like  securities  of  tlie  home  state  or  foreign 
country  shall  be  recognized  as  legal  investments  for  the  amount  of 
the  miiiinmm  capital  required.  The  residue  of  the  capital  and 
the  surplus  money  and  funds  of  every  domestic  insurance  corpora- 
tion over  and  above  its  capital,  and  the  deposit  that  it  may  be 
required  to  make  with  the  superintendent,  may  be  invested  in  or 
loaned  on  the  pledge  of  any  of  the  securities  in  which  deposits 
are  required  to  be  invested  or  in  the  public  stocks  or  bonds  of  any 
one  of  the  United  States,  or  in  bonds  and  mortgages  on  improved 
unencumbered  real  property  in  this  state  worth  imy  per  centum 
more  than  the  amount  loantJ^  thereon,  or  except  as  in  this  chap^^ 
ter  otherwise  provided,  in  the  stocks,  bonds  or  other  evidence 
of  indebtedness  of  any  solvent  institution  incorporated  under  the 
laws  of  the  United  States  or  of  any  state  thereof;  or  in  such  real 
estate  as  it  is  authorized  by  this  chapter  to  hold ;  but  no  such  funds 
shall  be  invested  in  or  loaned  on  its  own  stock  or  the  stock  of  any 
other  insurance  corporation  carrying  on  the  same  kind  of  insurance 
business,  except  that  any  such  company  organized  under  section 
seventy  of  this  chapter  for  the  purpose  of  engaging  in  business 
principally  as  a  surety  company  may,  subject  to  the  consent  of 
the  superintendent  of  insurance,  invest  such  funds  in  or  loan  such 
funds  on  the  stock  of  any  other  corporation  carrying  on  the  same 
kind  of  business  outside  of  but  not  within  the  United  States ;  pro- 
vided, however,  that  the  supcrintcndciit  in  determining  the  condi- 
tion of  any  such  corporation  so  loaning  or  investing  such  funds 
shall  not  allow  it  as  an  assejt  the  amount  of  the  funds  so  loaned  or 
invested ;  and,  provided  that,  if  a  stock  life  insurance  corporation 
shall  determine  to  become  a  mutual  life  insurance  corporation,  it 
may,  in  carrying  out  any  plan  to  that  end  under  the  provisions  of 
section  ninety-five  of  this  chapter,  acquire  any  shares  of  its  own 
stock  by  gift,  bequest  or  purchase.  Any  domestic  insurance 
corporation  may,  by  the  direction  and  consent  of  two-thirds  of  its 
board  of  directors,  managers  or  finance  committee,  invest,  by  loan 
or  otherwise,  any  such  surplus  moneys  or  funds  in  the  bonds  issued 
by  any  city,  county,  town,  village  or  school  district  of  this  state, 
pursuant  to  any  law  of  this  state.  Any  corporation  organized 
under  subdivision  one-a,  section  one  hundred  and  seventy  of  this 
chapter,  for  guaranteeing  the  validity  and  legality  of  bonds  issued 
by  any  state,  or  by  any  city,  county,  town,  village,  school  district, 
municipality  or  other  civil  division  of  any  state,  may  invest  by 
loan  or  otherwise  any  of  such  surplus  moneys  or  funds  as  provided 


§  16.  General  Provisions.  ?/1 

in  section  one  hundred  of  this  chapter.  Every  such  domestic  cor- 
poration doing  business  in  other  states  of  the  United  States  or  in 
foreign  countries  may  invest  its  funds  in  the  same  kind  of  securi- 
ties in  such  other  states  or  foreign  countries  as  such  corporati'^'ji  is 
by  law  allowed  to  invest  in,  in  this  state.  Any  life  insurance  com- 
pany may  lend  to  any  policyholder  upon  the  security  of  the  value 
of  his  policy  a  sum  not  exceeding  the  lawful  reserve  which  it  holds 
thereon,  and  such  loan  shall  become  due  and  payable  and  be 
satisfied  as  provided  in  the  loan  agreement  or  policy.  But  noth- 
ing in  this  section  shall  be  held  to  authorize  one  insurance  corpora- 
tion to  obtain,  by  purchase  or  otherwise,  the  control  of  any  other 
insurance  corporation. 

Source.— Former  §  16,  as  amended  by  L.  1893,  ehap.  112;  L.  1895,  chap.  917; 
L.  1897,  chap.  218;  L.  1906,  chap.  326;  L.  1907,  chap.  239;  originally  revised 
from  L.  1840,  chap.  287,  §§  1,  2;  L.  1849,  chap.  308,  §  8,  as  amended  by  L.  1857, 
chap.  469;  OL.  1853,  chap.  463,  §  6,  as  amended  by  L.  1881,  chap.  560,  §  8,  as 
amended  by  L.  1868,  chap.  318;  L.  1853,  chap.  466,  §  8,  as  amended  by  L.  1871, 
chap.  608;  L.  1868,  chap.  482,  §  1;  L.  1875,  chap.  423,  §  2,  as  amended  by  L. 
1886,  chap.  394;  L.  1885,  chap.  538,  §  14;  L.  1886,  cliap.  611,  §  7. 

Amended  by  L.  1909,  chap.  240  and  chap.  302;  L.  1910,  chap.  634;  L.  1911, 
chap.  150;  L.  1912,  chap.  233,  and  L.  1913,  chap.  304. 

Note. —  Section  16  was  amended  by  L.  1910,  chap,  634,  so  as  to  make  clearer 
the  requirements  by  law  as  to  the  investments  of  the  capital  surplus  of 
domestic  companies. —  Ed. 

SPECIAL  RESEKVE. —  The  second  sentence  of  §  16  applies  to  investment 
of  the  special  reserve  fund,  as  provided  for  by  §  130  in  excess  of  one-half 
of  its  capital  stock.    Attorney -General  Hep.,  1901,  page  240. 

BORROW  MONEY. —  An  insurance  corporation,  in  the  absence  of  any 
statutory  restriction,  has  the  power  to  borrow  money,  and,  as  an  incident 
thereto,  the  power  to  transfer  its  assets  in  trust  for  the  security  of  the 
lenders.    Nelson  v.  Eaton,  26  N.  Y.,  410. 

An  insurance  company  may  borrow  money  to  pay  losses,  and  it  may 
borrow  a  note  upon  which  to  raise  money  for  that  purpose.  Eurniss  v.  Gil- 
christ &  Co.,  1  Sandf.,  53. 

NOTES. —  A  mutual  insurance  company  may,  in  the  ordinary  prosecution 
of  its  business,  indorse  its  notes  to  creditors  in  lieu  of  cash.  Marine  Bank 
V.  Vail,  6  Bosw.,  421. 

A  fire  insurance  company  has  no  right  under  the  law  to  place  its  funds 
in  the  hands  of  an  agent  for  the  purpose  of  loaning  the  same  upon  call  in 
conjunction  with  the  funds  of  other  parties.  Attorney-General  Rep., 
April  20,  1911. 

MORTGAGE. —  An  offer  of  a  mortgagor  to  prove  that  at  the  time  the 
mortgagee,  a  domestic  insurance  corporation,  made  him  the  loan  on  his 
premises  they  were  incumbered  and  not  worth  fifty  per  centum  more  than 
the  loan,  presents  no  defense  to  an  action  on  the  mortgage.  Washington 
fjfe  Ins.  Co.  V.  Clason,  162  N.  Y.,  305. 

The  Department  of  Insurance  should  not  admit  as  a  legal  investment  any 
amount  represented  by  a  second  purchase  money  mortgage  'held  by  an  insur- 


22  The  Insurance  Law.  §  17. 

ance  company  where  the  first  purchase  mouey  mortgage  previously  held  by 
said  company  has  been  disposed  of.     Attorney-General  Rep.,  March  23,  11)15. 

Real  property  charged  with  ground  rent  is  incumbered  and  an  insurance 
company  is  not  permitted  to  invest  in  a  mortgage  on  such  property.  In  re 
Hunter,  Attorney-General  Rep.,  Jan.  24,  11>06. 

A  life  insurance  company  issuing  policies  on  the  tontine  or  "  ten  years 
dividend  system,"  is  in  no  sense  a  trustee  of  any  particular  fund  for  the 
holder  of  sucli  a  policy;  tlheir  relations  are  simply  that  of  debtor  and 
creditor,  and  the  policyiholder  at  the  expiration  of  the  ten  years  is  not 
entitled  to  an  accounting,  in  the  absence  of  any  evidence  of  misappropriation, 
wrongdoing  or  mistake  on  the  part  of  the  company.  Uhlman  v.  N.  Y.  L. 
Ins.  Co.,  lOU  N.  Y.,  421;  Simons  v.  K  Y.  L.  Ins.  Co.,  38  Hun,  300;  Bogardus 
V.  N.  Y.  L.  Ins.  Co.,  101  N.  Y.,  328. 

When  investments  in  mortgages  of  another  state  may  be  made  by  a 
domestic  insurance  company.    Attorney-General  Rep.,  1890,  page  145. 

SURPLUS. —  Investinent  of  the  surplus  assets  and  funds  may  be  made 
in  dividend-paying  stock  of  solvent  trust  companies  in  this  or  other  states. 
Attorney-General  Rep.,  1896,  page  278. 

The  capital  stock  of  an  insurance  company  may  be  invested  in  bonds  and 
mortgages  executed  directly  to  the  company  or  obtained  'by  assignment, 
where  the  charter  does  not  provide  the  mode  of  investment,  but  impliedly 
gives  the  power  to  invest  in  .stocks.     Mann  v.  Eckford's,  15  Wend.,  502. 

An  insurance  company  of  this  state  cannot  invest  in  a  bond  and  mortgage 
on  property  in  the  state  of  Pennsylvania  with  outstanding  ground  rents. 
Attorney-General  Rep.,  1906,  page  532. 

Insurance  companies  may  invest  their  assets  other  than  their  capital  in 
•bonds  of  the  Canadian  Southern  Railway  Company,  guaranteed  by  the  Mich- 
igan Central  Railroad  Company.     Attorney-General  Rep.,  1912,  page  573. 

A  domestic  life  insurance  company  may  invest  its  surplus  moneys  in  car 
trust  certificates  of  Pennsylvania  Steel  Freight  Car  Trust.  Attorney-General 
Rep.,  1906,  page  577. 

Every  domestic  life  insurance  corporation  doing  business  in  other  states  of 
the  United  States  or  in  foreign  countries,  may  invest  the  funds  required  to 
meet  its  O'bligations  incurred  in  such  other  states  or  foreign  countries  and  in 
conformity  to  the  laws  thereof,  in  the  same  kind  of  securities  in  such  othcx 
states  or  foreign  countries  that  such  corporation  is  by  law  allowed  to  invest 
in,  in  this  state. 

A  reasonable  discretion  is  given  by  the  statute  to  a  board  of  directors  of  a 
domestic  life  insurance  company  doing  business  in  a  foreign  country  to  invest 
such  part  of  its  fundb  as  may  be  required  to  meet  its  obligation  under  the 
laws  of  such  foreign  country,  in  lawfully  prescribed  securities  at  such  times 
and  in  such  amounts  as  will  best  subserve  and  protect  the  business  interests 
of  the  company  from  year  to  year.  A  board  of  directors  in  authorizing  trans- 
actions under  this  provision  of  the  Insurance  Law  will  be  held  to  a  strict 
account  for  any  abuse  of  its  discretionary  powers.  Ruling  Ins.  Dept.,  October 
15,  1908. 

§  17.    Securities  must  be  interest  or  dividend-paying. 

The  super intendent  of  insurance  shall  not  credit  any  insurance 
corporation  transacting  business  in  this  state  with  any  security  as 


§  18.  Genekal  Provisions.  23 

a  part  of  its  capital  or  as  an  investment  of  any  part  of  its  capital, 
or  receive  any  security  as  a  deposit,  unless  tlie  security  is  interest 
or  income-bearing  or  dividend-paying. 

Source. — Former  §  17;  originally  revised  from  L.  1886,  chap.  207,  §  2. 

Foreign  corporations  must  comply  with  the  conditions  imposed  upon 
domestic  corporations  in  regard  to  the  class  of  securities  which  they  may 
hold.    Attorney-General  Rep.,  1894,  page  201. 

§  18.    Stocks,  bonds  and  other  evidences  of  debt. 

If  any  domestic  insurance  corporation  shall  have  invested  any 
of  its  funds  in  or  loaned  any  of  its  funds  upon  the  stock,  bonds  or 
other  evidences  of  debt  of  other  corporations  or  of  any  nation,  state, 
county,  city,  town,  village,  school  district,  municipality,  or  other 
civil  division  of  any  state,  pursuant  to  the  laws  of  this  state,  and 
the  superintendent  shall  have  reason  to  believe  that  such  stock, 
bonds  or  other  evidences  of  debt  are  not  amply  secured  or  are  not 
yielding  an  income  he  may  direct  it  to  report  to  him  under  oath 
the  amount  thereof,  the  security  therefor  and  its  market  value. 
ISTo  stock  and  no  bond  or  other  evidence  of  debt  if  in  default  as  to 
principal  or  interest,  or  if  not  amply  secured,  shall  be  valued  as  an 
asset  of  the  corporation  above  its  market  value.  All  bonds  or 
other  evidences  of  debt  held  by  any  life  insurance  corporation 
authorized  to  do  business  in  this  state  shall,  if  amply  secured  and  if 
not  in  default  as  to  principal  or  interest,  be  valued  as  follows :  If 
purchased  at  par,  at  the  par  value;  if  purchased  above  or  below 
par,  on  the  basis  of  the  purchase  price  adjusted  so  as  to  bring  the 
value  to  par  at  maturity  and  so  as  to  yield  meantime  the  effective 
rate  of  interest  at  which  the  purchase  was  made ;  provided  that  the 
purchase  price  shall  in  no  case  be  taken  at  a  higher  figure  than  the 
actual  market  value  at  the  time  of  purchase,  and  provided  further 
that  the  superintendent  of  insurance  shall  have  full  discretion  in 
determining  the  method  of  calculating  values  according  to  the 
foregoing  rule,  and  the  values  found  by  him  in  accordance  with 
such  method  shall  be  final  and  binding ;  provided,  also,  that  any 
such  corporation  may  return  such  bonds  or  other  evidences  of  debt 
at  their  market  value  or  their  book  value,  but  in  no  event  at  an 
aggregate  value  exceeding  the  aggregate  of  the  values  calculated 
according  to  the  foregoing  rula  The  superintendent  of  insurance 
may,  at  any  time,  in  his  discretion,  require  any  insurance  corpora- 


24  The  Insurance  Law.  §§  19, 20. 

tion,  other  than  a  life  insurance  corporation,  authorized  to  do 
business  in  this  state  to  value  its  bonds  or  other  evidences  of  debt 
in  accordance  with  the  foregoing  rule. 

Source. — Former  §  18;  originally  revised  from  L.  1875,  chap.  423,  §  1. 

Ajiiended  by  L.  1909,  chap.  301,  and  L.  1910,  chap.  634. 

X'ote. —  Section  IS  was  amended  l)y  J..  1910,  chap.  634,  by  exempting  all 
insurance  corporations,  other  than  life  companies,  from  the  new  ruling  L.  1909, 
chap.  301,  requiring  amortization  of  securities  of  such  corporations  unless  the 
superintendent  determines  at  any  time  that  bonds  and  securities  in  com- 
panies of  other  kinds  shall  he  valued  on  amortization  basis. —  Ed. 

NOTES. —  An  insurance  company,  with  a  clause  in  the  act  incorporating  it, 
enumerating  the  kind  of  securities  upon  which  it  can  loan  moneys,  but  not 
including  promissory  notes,  has  no  power  to  loan  money  on  promissory  notes, 
or  on  any  other  security  other  than  those  specially  enumerated.  N.  Y.  Eire- 
man  Ins.  Co.  V.  Ely,  2  Cow.,  678. 

SURPLUS. —  The  surplus  assets  and  fund  of  the  domestic  insurance  com- 
panies may  be  invested  in  the  dividend- paying  stock  of  solvent  trust  com- 
panies in  this  and  other  states.     Attorney-General  Rep.,  1896,  page  278.    • 

ADVANCEMENT. —  An  insurance  corporation  has  no  power  to  advance  its 
money  or  other  obligations  to  sustain  another  corporation  engaged  in  a 
similar  business;  an  insurance  company  is  not  authorized  to  subscribe  to 
the  capital  stock  of  a  mutual  insurance  company,  and  to  agree  to  give  its 
notes  in  advance  for  premiums  on  insurance  to  be  subsequently  effected. 
Berry  v.  Yates,  24  Barb.,  199. 

REINSURANCE. —  One  insurance  company  cannot  acquire  the  property 
of  another  insurance  company  and  reinsure  its  risks  merely  as  an  incident 
to  the  transaction.    Pierson  v.  McCurdy,  33  Hun,  520;  atf'd  100  N.  Y.,  60& 

§  19.    Lien  on  stock  and  profits. 

Any  domestic  fire  or  marine  insurance  corporation  may  in  its 
by-laws,  prescribe  that  it  shall  have  a  lien  upon  the  stock  or  cer- 
tificates of  profits  of  any  stockholder  or  member  for  any  debt 
thereafter  becoming  due  to  such  corporation  for  premiums  from 
him,  but  a  copy  of  such  by-laws  shall  be  indorsed  upon  the  certifi- 
cate of  stock  or  profits,  and  the  lien  may  be  waived  by  the  written 
consent  of  the  president  of  the  corporation  upon  any  transfer  of 
such  stock  or  certificate. 

Source. — Former  §  19;  originally  revised  from  L.  1862,  chap.  367,  §  6. 

§  20.    Restrictions  as  to  real  property. 

Every  insurance  corporation  transacting  business  in  tliis  state 
may  purchase,  hold  and  convey  real  property  only  for  tlio  following 
purposes  and  in  the  following  manner: 

1.  The  building  in  which  it  has  its  principal  office  and  the  land 
upon  which  it  stands. 


§  20.  General  Pkovisions.  25 

2.  Such  as  shall  be  requisite  for  its  convenient  accommodation 
in  the  transaction  of  its  business. 

3.  Such  as  shall  have  been  acquired  for  the  accommodation  of 
its  business. 

4.  Such  as  shall  have  been  mortgaged  to  it  in  good  faith  by  way 
of  security  for  loans  previously  contracted  or  for  moneys  due. 

5.  Such  as  shall  have  been  conveyed  to  it  in  satisfaction  of 
debts  previously  contracted  in  the  course  of  its  dealings. 

6.  Such  as  shall  have  been  purchased  at  sales  upon  judgments, 
decrees  or  mortgages  obtained  or  made  for  such  debts. 

7.  Such  as  shall  have  been  acquired  under  sections  thirteen  and 
fourteen  of  the  general  corjx)ration  law. 

All  such  real  property  specified  in  subdivisions  three,  four,  five, 
six  and  seven  of  this  section,  as  shall  not  be  necessary  for  its 
accommodation  in  the  convenient  transaction  of  its  business,  shall 
be  sold  and  disposed  of  within  five  years  after  it  shall  have 
acquired  title  to  the  same,  or  within  five  years  after  the  same 
shall  have  ceased  to  be  necessary  for  the  accommodation  of  its 
business,  and  it  shall  not  hold  such  property  for  a  longer  period 
unless  it  shall  procure  a  certificate  from  the  superintendent  of 
insurance  that  its  interests  will  suffer  materially  by  the  forced 
sale  thereof,  in  which  event  the  time  for  the  same  may  be  extended 
to  such  time  as  the  superintendent  shall  direct  in  such  certificate. 

If  it  is  a  domestic  marine  insurance  corporation,  it  may  alsc 
acquire  and  hold  such  real  property  within  the  state  or  upon  or 
in  its  waters  as  is  or  may  be  adapted  to  or  available  for  use  in 
protecting,  storing  and  caring  for  wrecked  vessels  or  cargoes,  or 
in  protecting,  storing  and  caring  for  such  vessels  and  appliances  as 
are  or  may  be  employed  for  assisting  the  same,  or  is  or  may 
be  adapted  to  or  available  for  other  purposes  of  or  incident  to 
marine  salvage  service,  and  may  manage  and  dispose  of  such  real 
property  in  the  same  manner  and  with  like  effect  as  if  it  were  an 
unincorporated  owner  thereof. 

No  real  property  shall  be  acquired  by  aay  domestic  life  insur- 
ance corporation  under  subdivisions  one  or  two  hereof  or  under 
section  fourteen  of  the  general  corporation  law  and  no  real  property 
within  the  state  shall  be  acquired  by  any  foreign  life  insurance 


26  The  Insurance  Law.  §§  21, 22. 

corporation  under  subdivision  two  hereof,  except  witJi  the  approval 
of  the  superintendent  of  insurance.  No  real  property  shall  be 
disposed  of  by  any  domestic  life  insurance  corporation  and  no  real 
property  within  the  state  shall  be  disposed  of  by  any  foreign  life 
insurance  corporation,  by  exchange  for  other  real  property, 
wherever  situated,  as  the  consideration  for  the  transfer  in  whole 
or  part  unless  the  acquisition  of  the  latter  shall  be  requisite  for 
the  convenient  accommodation  of  the  corporation  in  the  ti*ansac- 
tion  of  its  business  and  shall  be  approved  by  the  superintendent 

Source. — Former  §  20,  as  amended  by  L.  190G,  chap.  326;  originally  revised 
from  L.  1&49,  chap.  308,  §  9;  L.  1853,  cliap.  403,  §  t),  as  amended  by  L.  1870, 
chap.  357;  L.  1853,  chap.  400,  §  9;  L.  1881,  chap.  484;  L.  1885,  chap.  538,  §  2; 
L.  1880,  chap.  Oil,  §  8;  L.  1887,  chap.  481,  §  1. 

See  §  53,  post.  Penalties  for  violation  of  any  provision  of  the  insurance 
law. 

CERTIFICATE. —  The  failure  of  an  insurance  company,  which  has  pur- 
chased real  estate  upon  the  foreclosure  of  a  mortgage  thereon  owned  by  it, 
and  has  held  the  same  for  more  than  live  years,  to  procure  within  such  live 
years  the  certificate  of  the  superintendent  does  not  affect  or  divest  its 
rights  in  such  real  estate,  and  it  may  still  sell  and  convey  a  good  title  to  a 
purchaser.     Home  Ins.  Co.  v.  Head,  30  Hun,  405. 

REAL  PROPERTY. —  A  life  insurance  corporation  has  a  right  to  purchase 
lands  on  which  to  erect  a  hospital  for  the  care  and  treatment  of  its  employees 
affected  with  tuberculosis.  People  ex  rel.  Metropolitan  Life  Ins.  Co.  v.  Hotch- 
kiss,  130  App.  Div.,  150. 

A  policyholder,  without  proof  of  special  damage,  cannot  restrain  the  insur- 
ance company  from  purchasing  land  for  building  purposes.  Levy  v.  Mutual 
Life  Ins.  Co.,  54  Hun,  315. 

§  21.    When  corporation  to  be  deemed  insolvent. 

Every  insurance  corporation  specified  in  aiiicles  two,  three,  four 
and  five  of  this  chapter,  whose  assets  and  credits  are  not  sufficient 
to  reinsure  its  outstanding  risks  in  a  solvent  insurance  corporation, 
shall  be  deemed  insolvent  and  may  be  proceeded  against  as  an 
insolvent  corporation. 

Source. — Former  §  21;  originally  revised  from  L.  1851,  chap.  95,  §  6;  L. 
1853,  chap.  403,  §  17,  as  amended  by  L.  1879,  chap.  IGl. 

See  §  101  et  seq.    General  Corporation  Law,  Action  to  dissolve  a  corporation. 

§  22.    Reinsurance. 

Every  insurance  corporation  doing  business  in  this  state  may 
reinflure  the  whole  or  any  part  of  any  policy  obligation  in  anv 


§  22.  General  Provisions.  27 

other  insurance  corporation;  provided  that  if  any  domestic  insur- 
ance corporation,  other  than  a  life  insurance  corporation,  shall  re- 
insure or  determine  to  reinsure  substantially  all  its  risks,  such 
reinsurance  shall  be  submitted  in  advance  to  and  have  the  approval 
of  the  superintendent  of  insurance,  and  provided  further,  that  no 
domestic  life  insurance  company  shall  reinsure  its  whole  risk  on 
any  individual  life  except  by  permission  of  the  superintendent  of 
insurance,  but  may  reinsure  any  portion  of  an  individual  risk  and 
receive  credit  for  the  resen^e  on  any  policy  covering  a  risk  rein- 
sured if  the  reinsuring  corporation  is  authorized  to  transact  busi- 
ness in  this  state,  and  may  also  receive  credit  for  taxes  on  the 
premiums  paid  on  any  such  policy.  ^Nfothing  in  this  chapter  con- 
tained shall  be  construed  as  permitting  the  reinsurance  of  a  life 
insurance  corporation  having  over  two  hundred  and  fifty  million 
dollars  of  insurance  outstanding  and  in  force. 

When  a  reinsurance  agreement  is  made  between  other  than  life 
insurance  corporations,  the  parties  to  such  agreement  shall,  upon 
the  policies  involved,  compute  their  unearned  premium  funds  as 
follows :  The  reinsuring  or  ceding  corporation  shall,  upon  the  por- 
tion of  its  liability  not  reinsured  maintain  a  reserve  to  be  computed 
in  accordance  with  section  118  of  the  insurance  law;  the  corpora- 
tion assuming  liability  by  reinsurance  from  the  corporation  issuing 
the  original  policy  shall  maintain  a  reserve  equal  to  that  which  the 
reinsuring  corporation  would  have  been  required  to  maintain  upon 
the  amount  reinsured  had  it  retained  the  liability  ceded  by  it.  E"o 
credit  of  any  kind  shall  be  allowed  or  given,  either  as  a  reduction 
of  taxes  or  of  liabilities,  to  any  corporation  transacting  business  in 
this  state,  for  reinsurance  made  in  corporations  not  authorized  to 
issue  policies  in  this  state.  The  superintendent  of  insurance  S'hall 
require  schedules  of  reinsurance  to  be  filed  by  each  corporation  at 
the  time  of  making  its  annual  report  to  the  department. 

Source. — Former  §  22,  as  amended  by  L.  1904,  cTiap.  759;  originally  revised 
from  L.  1871,  chap.  888,  §  G;  L.  1877,  chap.  229,  §§  1,  2;  L.  1879,  chap.  489, 
§§  3,  4,  as  amended  by  L.  1885,  chap.  276. 

Amended  by  L.  1909,  chap.  301;  L.  1910,  chap.  168,  and  L.  1911,  chap.  369. 

Xote. —  Section  102  was  amended  by  L.  1911,  chap.  369,  so  as  to  provide 
that  the  section  shoiikl  not  apply  to  policies  of  reinsurance.  Its  purpose  was 
to  supply  a  wider  market  for  the  roinsuranco  of  risks  of  failed  life  insurance 
corporations  by  permittin<i:  tho  ronipanios  wliich  had  a  non-participating 
business  to  reinsure  participating  policies  and  vice  versa.  At  the  same  time, 
in    anticipation    of    a    possible    merger    of    giant    life    insurance    corporations 


28  The  Insurance  Laws.  §  22. 

through  a  reinsurance  arrangement,  section  22  was  amended  so  as  to  prohibit 
sudh  merger  in  case  any  company  has  outstanding  upward  of  two  hundred 
and  fifty  million  dollars  of  insurance  in  force. 

An  amendment  covering  section  22  by  L.  1901),  chap.  301,  prohibits  the 
reinsurance  by  a  domestic  life  insurance  company  of  its  whole  risk  on  any 
individual  life  except  by  permission  of  the  superintendent  of  insurance. —  Ed. 

See  §  240,  post.     Reinsurance  of  fraternal  beneficiary  societies,  etc. 

See  §  1196,  Penal  Law.  Transfers  to  and  reinsurance  of  risks  in  unau- 
thorized foreign  corporations  prohibited  to  co-operative  associations. 

REINSURANCE. —  Risks  held  by  foreign  insurance  companies  may  be  rein- 
sured by  domestic  insurance  companies.    Attorney-General  Rep.,  1896,  page  145. 

The  fact  that  a  life  insurance  company  is  authorized  to  reinsure  its  risks 
does  not  release  it  from  any  of  its  existing  obligations.  People  ex  rel.  Mut. 
Ins.  Co.,  92  N.  Y.,  105. 

A  contract  by  a  life  insurance  company  to  pay  a  sum  certain  on  a  future 
day  or  on  the  death  of  a  party  before  that  day,  on  condition  that  the 
other  party  shall  pay  to  it  a  certain  sum  annually,  is  violated  by  the  com- 
pany when  it  transfers  all  its  assets  to  another  company  and  ceases  to  do 
business.    Meade  v.  St.  Louis  Life  Ins.  Co.,  51  How.  Pr.,  1. 

A  transfer  of  assets  of  one  insurance  company  to  another,  the  latter  assum- 
ing the  liability  of  the  former  on  its  outstanding  policies,  is  not  reinsurance. 
Raymond  v.  Security  Ins.  Co.,  44  Misc.,  31. 

The  word  "  reinsurance  "  as  used  in  the  statute  means  premiums  collected 
by  such  company  for  reinsuring  the  risks  of  other  companies,  and  such 
premiums  are  included  in  the  term  "gross  premiums  received;"  the  sum 
paid  out  by  such  company  to  other  companies  for  reinsuring  its  own  risks 
is  also  included  and  cannot  be  deducted  from  the  amount  thereof,  since  such 
sum  is  an  expense  of  the  business.  People  ex  rel.  Contmental  Ins.  Co.  v. 
Miller,  177  N.  Y.,  515. 

Reinsurance  should  be  made  in  the  name  of  and  for  the  benefit  of  the 
company,  and  not  for  individual  policyholders.  Casserly  v.  Manners,  48  How. 
Pr.,  219. 

A  corporation  organized  imder  §  70,  subd.  4,  may  insure  entire  risks  of  a 
foreign  surety  company.     Attorney- General  Rep.,  1896,  page  145. 

A  foreign  marine  insurance  company  transacting  business  in  the  state  of 
New  York  is  entitled,  under  this  section,  to  exemption  from  taxation  upon 
premiums  paid  by  it  for  reinsurance  in  companies  authorized  to  issue  policies 
in  this  state  after  October  1,  1892,  the  date  at  which  the  Insurance  Law  took 
effect;  but  the  act  is  not  retroactive  and  does  not  relate  to  premiums  paid 
for  reinsurance  prior  to  that  date.  People  v.  Reliance  Marine  Ins.  Co.,  70 
Hun,  554. 

TRANSFERRING  BUSINESS.— A  live  stock  insurance  company  organized 
under  the  provisions  of  article  VIII  of  the  Insurance  Law  cannot  transfer 
its  property,  franchises  and  business  through  an  individual  to  a  businesr 
corporation  of  a  foreign  state.     Attorney-General  Rep.,  1896,  page  276. 

An  insurance  company  is  not  entitled  to  a  deduction  on  account  of  reinsur- 
ance made  by  it  in  Lloyds,  which  is  not  amenable,  and  has  not  paid  the 
tax  provided  for  by  §  34.  In  re  Standard  Marine  Insurance  Company, 
Attorney -General  Rep.,  1896,  page  151. 


§  23.  General  Provisions.  29 

PRO  RATA. —  The  words  "  pro  rata  "  in  a  policy  of  reinsurance  of  a  tire 
insurance  company  mean  according  to  the  proportion  which  the  amount  of 
the  policy  of  reinsurance  bears  to  the  amount  of  original  insurance  —  that 
proportion  remains  fixed  and  cannot  be  changed  by  any  act  of  the  reinsured. 
Home  Ins.  Co.  et  al.  v.  Continental  Ins.  Co.,  180  M.  Y.,  389;  aff'g  89  App. 
Div.,  1. 

REINS LJR'ANCE. —  The  authority  given  to  insurance  companies  to  rein- 
sure policies  or  to  take  the  risks  of  other  companies  does  not  justify  sul>- 
pcriptions  by  them  to  the  capital  stock  of  a  mutual  insurance  company. 
Herry  v.  Yates,  24  Barb.,  199. 

§  2,3.    Reinsurance  by  receiver. 

The  receiver  of  any  domestic  insurance  corporation  may  rein- 
sure, upon  the  written  consent  of  the  superintendent  of  insurance 
and  the  attorney-general,  all  of  the  policy  obligations  of  the  corpo- 
ration in  any  solvent  corporation  authorized  to  do  business  in  this 
state,  if  the  assets  of  the  corporation  of  which  he  is  receiver  are 
suffiicient  to  effect  such  reinsurance.  If  such  assets  are  insufficient 
for  that  purpose,  the  receiver,  upon  the  like  consent,  may  reinsure 
a  percentage  of  each  policy  obligation  on  such  corporation  out- 
standing to  the  extent  that  its  assets  may  be  sufficient  for  thnt 
purpose.  No  contract  of  reinsurance  shall  be  entered  into  by 
the  receiver,  except  in  pursuance  of  an  order  of  the  court  in  which 
the  receiver  was  appointed  directing  the  reinsurance  and  estab- 
lishing the  general  form  of  the  contract  for  the  same. 

Source. —  Former   §  23;   originally  revised  from  L.  1877,  chap.  229,  §  3. 

REINSURANOE. —  The  court,  in  directing  a  receiver  of  an  insurance  com- 
pnny  to  reinsure  for  the  benefit  of  policyholders,  should  give  a  preference  to 
domestic  companies,  and  to  the  one  which  will  afford  the  best  security,  not- 
withstanding many  policyholders  unite  in  preferring  another  company. 
Mooney  v.  British  Com.  Life  Ins.  Co.,  9  A^bb.  Pr.,  N.  S.,  103. 

The  receiver  of  an  insolvent  fire  insurance  company  isi  justified  in  using  the 
unearned  premium  fund  for  purposes  of  reinsurance  or  of  restoring  to  the 
policyholders  upon  cancellation  of  their  outstanding  policies  that  part  of  the 
unearned  premium  applicable  td  such  cancelled  policies;  policyhold'crs  are 
preferred  creditors  to  the  extent  of  the  unearned  premium;  a  corporation,  in 
contemplation  of  insolvency,  may  use  its  unearned  premium  fund  in  the 
acquiring  of  reinsurance  as  to  all  outstanding  fire  policies.  Attorney-General 
Rep.,  1906,  page  558. 

The  fact  that  a  life  insurance  company  is  authorized  to  reinsure  its 
risks  does  not  release  it  from  any  of  its  existing  obligations.  People  v. 
Empire  Mut.  Ins.  Co.,  92  N.  Y.,  105. 

Where  the  receiver  of  an  insurance  company  entered  intx)  a  contract  in 
the  state  of  N'ew  Jersey  with  a  foreign  insurance  company  for  reinsurance, 
which  contract  was  ratified  and  approved  by  order  of  the  court,  the  foreign 
company  was  estopped  from  setting  up  the  defense  that  the  contract  was  in 
violation  of  the  laws  of  this  state.    Jay  v.  De  Groot,  2  Hun,  205. 


30  The  Insurance  Law.  §§  24,  25. 

§  24.    Limitation  of  risk. 

No  domestic  insurance  corporation,  nor  any  insurance  corpora- 
tion organized  under  the  laws  of  any  country  outside  of  the  United 
States,  doing  business  in  this  state,  shall  expose  itself  to  any  loss 
on  any  one  risk  or  hazard  to  an  amount  exceeding  ten  per  centum 
of  its  capital  and  surplus.  'No  insurance  corporation  incorporated 
under  the  laws  of  any  other  state  of  the  United  States,  doing 
business  in  this  state,  shall  expose  itself  to  any  loss  on  any  one 
risk  or  hazard  within  this  state  to  an  amount  exceeding  ten  per- 
centum  of  its  capital  and  surplus.  No  portion  of  any  such  risk 
or  hazard  which  shall  have  been  reinsured  in  a  corporation  author^ 
ized  to  do  insurance  business  in  this  state  shall  be  included  in 
determining  the  limitation  of  risk  prescribed  in  this  section. 
This  section  shall  not  apply  to  life  insurance  corporations,  nor  to 
marine  insurance  corporations  authorized  to  do  business  in  this 
state,  nor  to  the  certificates  of  title  guarantee  corporations, 
guaranteeing  the  correctness  of  searches  for  all  instruments, 
liens  or  charges  affecting  titles  to  real  property  and  chattels  real, 
or  guaranteeing  and  insuring  the  owners  of  real  property  and 
chattels  real  and  others  interested  therein  against  loss  by  reason 
of  defective  titles  thereto  and  incumibrances  thereon. 

Source. — Former  §  24,  as  amended  by  L.  1906,  chap,  326;  originally  revised 
from  L.  1849,  chap.  308,  §  5;  L.  1853,  chap.  466,  §  6,  as  amended  by  L.  1862, 
chap.  367;  L.  1871,  chap.  888,  §  1;  L.  1879,  <?hap.  489,  §§  1,  2. 

Amended  by  L.  1910,  chap.  634,  and  L.  1911,  chap.  595. 

FOREIGN  LAWS. —  Every  person  who  deals  with  a  foreign  corporation 
impliedly  subjects  himself  to  such  laws  of  its  own  country  affecting  its  power 
and  obligations  as  the  known  and  established  policy  of  that  government 
authorizes.    Canada  Southern  R.  Co.  v.  Gebhard,  109  U.  S.,  627. 

RISKS. —  A  surety  company  is  not  exempt  from  section  24  of  the  Insur- 
ance Law,  limiting  the  amount  of  any  one  risk;  the  section  was  not  rendered 
inapplicable  by  chap.  720  of  1893,  as  amended  by  chap.  178  of  1895;  the  value 
of  collaterals  taken  by  the  company  are  to  be  deducted  from  the  amount. 
Ind.  and  Gen.  Trust  Co.  v.  Tod,  56  App.  Div.,  39.  The  interpretation  and 
effect  of  all  contracts  is  governed  by  the  law  of  the  place  where  made. 
Smith  v.  Mutual  Life,  14  Allen,  336;  Wayman  v.  Southard,  10  Wheat.,  1. 

§  25.  Jurisdiction  of  superintendent  over  foreign  cor- 
porations. 

The  superintendent  of  insurance  shall  have  tlie  Rame  super- 
vision and  make  the  same  examination  of  the  buairioss  and  aiTaira 


§25.  General  Provisions.  31 

of  every  foreign  insurance  corporation  doing  business  in  this  state, 
as  of  domestic  insurance  corporations,  doing  the  same  kind  of  busi- 
ness, and  of  its  assets,  books,  accounts  and  general  condition. 
Every  such  foreign  corporation  and  its  agents  and  officeis  shall 
always  be  subject  to  and  be  required  to  make  the  same  statements 
and  answer  the  same  inquiries  and  be  subject  to  the  same  examina- 
tions, and,  in  case  of  default  therein,  to  the  same  penalties  and 
liabilities  as  domestic  insurance  corporations  doing  the  same  kind 
of  business,  or  any  of  the  agents  or  officers  thereof,  are  or  may 
be  liable  to  under  the  laws  of  this  state  or  the  regulations  of  the 
insurance  department. 

The  superintendent  may,  whenever  he  deems  it  necessary,  either 
in  person  or  by  a  proper  person  appointed  by  him,  repair  to  the 
general  office  of  such  foreign  corporation,  wherever  the  same  may 
be,  and  make  an  investigation  and  examination  of  its  affairs  and 
condition.  He  may  cancel  and  revoke  the  certificate  of  any  such 
foreign  corporation  refusing  or  unreasonably  neglecting  to  comply 
with  the  provisions  of  this  section,  or  to  allow  the  examination 
herein  provided  for  to  be  made,  and  prevent  such  corporation  from 
further  continuance  in  business  in  this  state. 

A  foreign  insurance  corporation  may  transact  in  this  state  only 
such  kind  of  business  as,  under  the  laws  of  this  state,  a  like 
domestic  insurance  corporation  is  authorized  to  transact. 

'No  such  corporation  shall  transact  any  business  in  this  state 
not  specified  in  the  certificate  of  authority  granted  by  the 
superintendent. 

Source. — Former  §  25,  as  amended  by  L.  1896,  chap.  845;  originally  revised 
from  L.  1869,  chap.  902,  §  14;  L.  1871,  chap.  888,  §  8;  L.  1873,  chap.  593,  §  2; 
L.  1881,  chap.  484,  §  2;  L.  1882,  chap.  235,  §  2. 

Amended  by  L.  1910,  chap.  168. 

CONDITIONS. —  A  state  has  the  right  to  impose  conditions,  not  in  con- 
flict with  the  Constitution  or  the/  laws  of  the  United  States,  to  the  trans- 
action of  business  within  its  territory  by  an  insurance  company  chartered 
by  another  state,  or  to  exclude  such  company  from  its  territory,  or,  having 
given  a  license,  to  revoke  it,  with  or  without  cause.  Doyle  v.  Continental 
Ins.  Co.,  94  U.  S.,  635. 

A  corporation  organized  in  one  State  can  transact  business  in  another  only 
with  the  consent,  express  or  implied  of  the  latter,  and  this  consent  may  be 
accompanied  by  such  conditions  as  the  latter  State  may  think  fit  to  impose, 
which  do  not  conflict  with  the  Constitution  or  laws  of  the  United  States. 
The  Lafayette  Ins.  Co.  v.  French,  18  How.  (U.  S.),  409;  Bank  v.  Earl,  13 
Pet.,  510. 


32  The  Insurance  Law.  §  26. 

The  business  of  a  foreign  insurance  company  writing  marine  insurance  is 
not  protected  by  the  interstate  commerce  clause  of  the  Constitution;  a  State 
may  exclude  a  foreign  insurance  company  or  impose  conditions  upon  its  doing 
business  within  such  State.    Hooper  v.  State  of  California,  155  U.  S.,  648. 

This  section  applies  to  all  corporations  authorized  by  la»w  to  make  insur- 
ance. In  re  National  Credit  Insurance  Company,  Attorney-General  Kep., 
1893,  page  164. 

DEPOSIT. —  An  insurance  company,  organized  under  the  laws  of  another 
state  of  the  United  States,  for  the  transaction  of  business  specified  in  §  70 
of  the  Insurance  Law,  must  make  the  same  deposit  of  securities  that  is 
required  from  a  domestic  company.    Attorney-General  Rep.,  1897,  page  169. 

CAPITAL. —  A  foreign  insurance  corporation  doing  business  under  a  special 
charter  granted  in  the  state  of  Maryland  or  under  the  general  law  of  that 
state  need  not  have  its  maximum  capital  stock  paid  up  before  it  shall  be 
allowed  to  do  business  in  this  state.  In  re  National  Fire  Insurance  Company, 
Attorney-General  Rep.,  1897,  page  234. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law,  a 
*  foreign  corporation "  include?  one  incorporated  under  the  laws  of  another 
state  of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep., 
1895,  page  56. 

CAPITAL  STOCK. —  The  capital  stock  of  fire  insurance  companies  of  other 
states  must  be  fully  paid  up  before  such  companies  can  be  authorized  to  do 
business  here.     Attorney-General  Rep.,  1893,  page  336. 

WHEN  NOT  ADMITTJED. —  A  foreign  corporation  combining  the  business 
of  building  associations,  life  insurance  and  savings  funds  cannot  be  admitted 
in  this  state.  In  re  United  Security  Life  Insurance  and  Trust  Co.,  Attorney- 
General  Rep.,  1896,  page  153. 

SEVERAL  KINDS  OF  INSURANCE.— A  foreign  corporation,  like  a  domestic 
insiu-ance  company,  cannot  combine  different  kinds  of  insurance  specified  in 
this  section.     Attorney-General  Rep.,  1896,  page  196. 

A  foreign  corporation  must  limit  itself  to  the  kinds  of  insurance  specified 
in  the  article  of  the  insurance  law  under  which  domestic  corporations  are 
organized.  In  re  Ocean  Accident  and  Guaranty  Corporation  of  London, 
England,  Attorney-General  Rep.,  1897,  page  230. 

MANDAMUS. —  A  mandamus  will  not  lie  to  compel  the  superintendent  of 
insurance  in  this  state  to  do  an  act  regarding  the  admission  to  this  state 
of  an  insurance  company  of  another  state.  People  ex  rel.  Equitable  Fire  Co. 
V.  Fairman,  12  Abb.  N.  C,  268. 

§  26.    Deposits  by  insurance  corporations  of  other  states. 

Every  insurance  corporation  incorporated  under  the  laws  of  any 
other  state  of  the  United  States,  and  doing  business  in  this  state, 
shall  keep  on  deposit  with  the  superintendent  of  insurance  of  this 
state,  or  with  the  auditor,  comptroller  or  general  fiscal  officer  of 
the  state  by  whose  laws  it  is  incorporated,  the  same  amount  and 
character  of  securities  which  a  like  domestic  insurance  corporation 
is  required  to  deposit  with  the  superintendent  of  insurance  of  this 


§  26.  General  Provisions.  33 

state,  but  a  corporation  of  another  state,  depositing  with  its  home 
state  authorities  bonds  and  mortgages  on  improved  unencumbered 
real  property  located  in  the  home  state  or  in  this  state  worth  fifty 
per  centum  more  than  the  amount  loaned  thereon,  shall  be  allowed 
credit  for  such  deposits  covered  by  any  certificate  of  deposit  fur- 
nished the  superintendent  of  insurance  as  hereinafter  required. 
The  superintendent  of  insurance  shall  be  furnished  with  the  certifi- 
cate of  such  auditor,  comptroller  or  general  fiscal  officer,  under  his 
hand  and  official  seal,  that  he,  as  such  auditor,  comptroller  or  gen- 
eral fiscal  officer  of  such  state,  holds  in  trust  and  on  deposit,  for 
the  benefit  of  all  the  policy-holders  of  the  corporation,  such  stocks 
and  securities.  Such  certificate  shall  embrace  the  items  of  the 
securities  so  held,  and  shall  state  that  the  officer  making  it  is  satis- 
fied that  the  securities  are  worth  the  amount  required  by  law. 

Source. — Former  §  26;  originally  revised  from  L.  1853,  chap.  466,  §  23,  as 
amended  by  L.  1875,  chap.  555;  L.  1853,  chap.  463,  §  14,  as  amended  by  L.  1862, 
chap.  300;  L.  1877,  chap.  439,  §  1,  as  amended  by  L.  1881,  chap.  628. 

Amended  by  L.  1910,  chap.  634. 

See  §  28,  post.     Special  deposit  required  in  certain  cases. 

Note. —  Section  26  was  amended  by  L.  1910,  chap.  634,  so  as  to  provide  that 
a  corporation  of  another  state,  depositing  with  its  home  state  authorities 
bonds  and  mortgages  on  improved  unencumbered  real  property  located  in  the 
liome  state  or  in  thisi  State  worth  50%  more  than  the  amount  loaned 
thereon,  shall  be  allowed  credit  for  such  deposits  covered  by  any  certificate 
of  deposit  furnished  the  superintendent  of  insurance  as  hereinafter  required. 

This  amendment  was  made  necessary  for  the  reason  that  section  13  was 
amended  by  eliminating  mortgage  loans  on  improved  realty  as  authorized 
deposits  under  section  13.  It  was  not  the  intention  of  the  Legislature,  'how- 
ever, to  make  such  an  elimination  with  regard  to  deposit  credits  with  their 
State  Departments  'by  corporations  of  other  states  and  thence  the  specific 
y  provision  above  referred  to  was  placed,  in  this  section. —  Ed. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law,  a 
■'  foreign  corporation  "  includes  one  incorporated  under  the  laws  of  another 
state  of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep., 
1895,  page  56. 

DEPOSIT. —  It  is  the  policy  of  our  Insurance  Law  to  require  foreign  insur- 
ance companies  to  deposit  approved  securities  with  the  superintendent  of 
insurance  as  a  condition  precedent  to  the  transaction  of  business  here. 
Attorney-General  Rep.,  1894,  page  201. 

A  foreign  company  desiring  to  do  a  life  and  accident  business  must  deposit 
the  maximum  amount.     Attorney-General  Rep.,  Jan.  25,  1905. 

The  deposit  of  $200,000  with  the  treasurer  of  the  state  of  Maryland  as 
'*  security  for  all  the  holders  of  policies  or  guarantees  of  said  corporation,"  is 
not  a  compliance  with  this  section.     Attorney-General  Rep.,  1906,  page  526. 


34  The  Insurance  Law.  §  27. 

A  foreign  company  must  deposit  in  home  state  $100,000  for  each  kind  of 
insurance  which  it  is  organized  to  transact  under  §  70,  or  $250,000  if  for 
three  or  more  kinds.    In  re  General  I.  Co.,  Attorney-General  Rep.,  Jan.  8,  1906. 

An  insurance  company,  organized  under  the  laws  of  another  state  of  the 
United  States,  for  the  transaction  of  business  specified  in  §  70  of  the  Insur- 
ance Law,  must  make  the  same  deposit  of  securities  that  is  required  from  a 
domestic  company.     Attorney-General  Rep.,  1897,  page  169. 

A  foreign  life  insurance  company  may  deposit  with  the  superintendent 
of  insurance  bonds  of  the  government  under  which  it  is  organized,  provided 
such  government  accepts  from  our  insurance  companies  seekiing  to  do 
business  there  government  bonds  of  the  United  States  or  of  this  state. 
Attorney -General  Rep.,  1893,  page  242. 

IMPROVED,  UNEN^^CUMIBERED  REiAL  PROPERTY  DEFINED.—  Attorney- 
General  Rep.,  Oct.  17,  1892;  Oct.  8,  1895;  Dec.  9,  1904,  and  Jan.  24,  1906. 

BANKING. —  A  corporation  is  not  entitled  to  admission  in  this  state  for 
the  purpose  of  transaction  of  a  business  which  includes  a  species  of  banking 
business  in  connection  with  insurance.  In  re  United  Security  Life  Insurance 
and  Trust  Co.,  Attorney-General  Rep.,  1896,  page  153. 

WITHDRAWING  DEPOSIT.— When  a  greater  sum  than  the  minimum 
required  is  deposited,  the  superintendent  holds  the  excess  in  trust,  and  the 
excess  cannot  be  withdrawn  until  the  conditions  of  the  trust  have  been  com- 
plied with.     L.  Ins.  Co.  v.  Maxwell,  131  N.   Y.,  286. 

Insurance  companies  retiring  from  business  may  withdraw  from  deposit 
with  the  superintendent  of  insurance  all  securities  in  excess  of  an  amount 
sufficient  to  secure  policyholders  in  the  United  States.  Attorney-General 
Rep.,    1893,   page   216. 

ASSIGNING  DEPOSIT. —  An  insurance  company,  having  made  a  deposit  ol 
funds  with  the  superintendent  of  insurance,  for  the  security  of  policyholders, 
pursuant  to  law,  has  no  right  to  make  an  assignment  of  the  same,  or  any 
part  thereof.     Attorney-General  Rep.,  1894,  page  223. 

NUMBER  OF  DIRECTORS.—  The  phrase  in  this  section  which  reads,  "  the 
consent  of  the  superintendent  shall  be  first  obtained  to  such  increase  or  reduc- 
tion of  the  number  of  directors,"  may  be  construed  to  mean,  must  be  ob- 
tained as  a  condition  precedent  to  its  going  into  effect.  Attorney-General 
Rep.,  February  6,  1914. 

§  27.  Funds  and  capital  of  insurance  corporations  incorpo- 
rated outside  of  the  United  States. 

A  foreign  insurance  corporation  incorporated  by  or  existing 
under  the  government  or  laws  of  any  country  outside  of  the  United 
States,  and  admitted  to  do  business  in  this  state,  shall  not 
transact  any  business  of  insurance  in  this  state,  unless  it  shall 
have  within  the  United  States,  deposited  with  insurance  depart- 
ments or  held  in  tnist  as  hereinafter  provided,  not  less  than  five 
hundred  thousand  dollars,  if  a  fire  insurance  corporation,  and  not 
less  than  two  hundred  thousand  dollars  if  a  life  or  casualty  insur- 


§  27.  General  Provisions.  35 

ance  corporation,  invested  in  like  manner  as  tlie  capital  of  a  similar 
domestic  insurance  corporation  is  required  to  be  invested. 

The  capital  of  such  foreign  fire  insurance  corporation,  doing  fire 
insurance  business  in  this  state,  or  of  any  such  company  hereafter 
admitted  to  such  business  in  tliis  state,  shall,  for  tlie  purposes  of 
this  chapter,  be  the  aggregate  value  of  such  sums  or  securities  as 
such  corporation  shall  have  on  deposit  in  the  insurance  department 
of  this  state,  and  of  the  other  states  of  the  United  States,  for  the 
benefit  of  policy  holders  in  any  of  such  states  or  in  the  United 
States,  and  of  all  bonds  and  mortgages  for  money  loaned  on  real 
estate  in  tliis  state  or  in  any  state  of  the  United  States,  if  such 
loans  shall  be  made  in  conformity  with  the  laws  of  such  state  pro- 
viding for  the  incorporation  of  insurance  companies  therein  and 
the  investment  of  their  capital,  and  of  all  other  assets  and  property 
in  the  United  States,  in  which  fire  insurance  companies  may 
invest  under  the  provisions  of  sections  thirteen  and  sixteen,  ii 
«ucli  bonds  and  mortgages,  assets  and  property  'shall  be  held 
in  the  United  States  by  trustees,  approved  by  the  superin- 
tendent of  insurance  and  citizens  of  the  United  States,  or  deposited 
with  a  trust  company  to  be  approved  by  him,  for  the  general 
benefit  and  security  of  all  its  policy  holders  in  the  United 
States  after  taking  from  such  aggregate  value  the  same  deductions 
for  losses,  debts  and  liabilities  in  this  and  the  other  states  of  the 
United  States,  and  for  premiums  upon  risks  therein  not  yet 
expired,  as  is  authorized  or  required  by  the  laws  of  this  state,  or 
the  regulation  of  its  insurance  department  with  respect  to  fire 
insurance  companies  organized  under  the  laws  of  this  state. 

In  addition  to  the  reports  required  by  law  of  any  such  foreign 
fire  insurance  corporation,  it  shall  annually,  in  the  month  of  Jan- 
uary, render  to  the  superintendent  a  detailed  statement  of  the 
items  mailing  up  such  capital,  and  the  deductions  to  be  made  there- 
from, signed  and  verified  by  the  manager  and  a  majority  of  the 
trustees  (or  if  a  trust  company,  by  the  proper  officers  thereof)  of 
the  corporation  residing  in  the  United  States,  and  the  superintend- 
ent shall,  thereupon,  and  from  such  examinations  as  he  may  mak^ 
of  the  affairs  of  the  corporation,  determine  the  amount  of  such 
capital  as  of  the  first  day  of  January,  and  issue  to  such  corpora 


36  The  Insurance  Law.  §  27. 

(ion  his  certificate^  of  tlio  ainoiiiit  of  its  capital  so  cleteriiiined  ;  and 
if  it  shall  at  any  time  ap|X3ar  that  the  net  capital  for  which  the 
last  certilicato  shall  be  outstanding  has  been  materially  reduced, 
I  lie  snperiiitcndetit  may  call  in  such  certificate  and  issue  another, 
corresiwnding  to  such  reduced  capital,  providing  the  capital  is  not 
reduced  below  the  sum  of  two  hundred  thousand  dollars. 

The  capital  of  any  such  foreign  fire  insurance  company,  so  d(^ 
termined  and  certified,  shall  be  subject  to  taxation  as  provided 
for  in  section  thirty-four  of  this  chapter. 

Wien  any  part  of  its  capital  is  held  by  trustees  or  by  a  trust 
company,  pursuant  to  the  provisions  of  this  section,  such  trustees 
or  trust  company  shall  be  appr)inted  by  the  board  of  managers  or 
directors  of  such  foreign  insurance  corporation,  and  a  duly  certi- 
fied copy  of  tlie  vote  or  resolution  creating  the  trust  shall,  with  a 
certified  copy  of  such  trust  deed,  be  filed  in  the  office  of  the  super 
intendent  of  insurance;  and  the  superintendent  may  examine 
such  trustees  or  tlie  agent  or  attorney  of  tlie  corporation  in  the 
same  manner  as  he  is  authorized  by  this  chapter  to  examine  the 
affairs  and  funds  of  any  domestic  insurance  corporation,  but  the 
superintendent  of  insurance  shall,  upon  the  written  request  of  any 
such  foreign  fire  insurance  company,  transfer  to  trustees  duly  ap- 
pointed by  it  under  the  provisions  of  this  section  any  excess  of 
securities  which  it  shall  have  deposited  with  him  above  the  sum 
of  two  hundred  thousand  dollars.  The  deposit  required  of  such 
corporation  shall  be  reckoned  and  considered  as  the  sum  of  two 
Hundred  thousand  dollars,  which  shall  be  deposited  with  the  super- 
intendent of  insurance  in  the  securities  authorized  by  law.  The 
said  superintendent  may  also  receive  such  additional  amounts  as 
said  foreign  insurance  comnapany  shall  deposit  witli  him,  but  any 
additional  amounts  now  on  deposit,  or  which  may  hereafter  be 
deposited  with  the  said  superintendent,  shall  be  received  and  held 
by  him  as  a  voluntary  deposit,  in  trust  for  all  the  policy  holders 
of  said  foreign  insurance  company  in  the  United  States,  and  any 
securities  in  excess  of  said  twx)  hundred  thousand  dollars  as  afore- 
said, shall  on  the  written  request  of  said  foreign  insurance  com- 
pany, be  transferred  to  the  trustees  appointed  by  said  company,  q?- 
in  this  section  provided. 


§  27.  General  Provisions.  37 

Source. — Former  §  27;  originally  revised  from  li.  S.,  chap.  20,  tit.  21,  §§  1,  2; 
L.  1853,  chap.  4G6,  §  23,  as  .amended  by  L.  1875,  dhap.  555;  L.  1871,  chap.  888, 
§§2-4;  L.  1877,  chap.  209,  §  2,  as  amended  by  L.  1881,  cliap,  €71. 

Amended  by  L.  1910,  chap.  634. 

FOREIGN  CORPORATION.— Within  the  meaning  of  the  insurance  law,  a 
"  forei^i  corporation "  includes  one  incorporated  under  the  laws  of  anotlier 
State  of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-dene ral  Rep., 
1895,  page  56. 

APPLICATION. —  This  section  applies  to  all  corporations  authorized  by 
law  to  make  insurance.  In  re  National  Credit  Insurance  Company,  Attorney- 
General  Rep.,  1893,  page  164. 

When  a  greater  sum  than  the  minimum  required  is  deposited,  the  super- 
intendent holds  the  excess  in  trust,  and  the  excess  cannot  be  withdrawn 
until  the  conditions  of  the  trust  have  been  complied  with.  L.  Ins.  Co.  v. 
Maxwell,  131  N.  Y.,  286. 

The  securities  deposited  by  a  foreign  insurance  company  with  the  insur- 
ance department  are  to  be  held  for  the  benefit  of  those  policyholders  insured 
in  the  same  class  or  classes  of  insurance  which  the  company  is  authorized 
to  write  in  this  state.    Attorney -General  Rep.,  1892,  page  389. 

Foreign  life  insurance  companies  seeking  to  do  business  here  must  deposit 
with  the  superintendent  of  insurance  at  least  $200,000,  but  are  not  required 
to  have  their  capital  fully  paid  in.    Attorney-General  Rep.,  1900,  page  178. 

ASSIGNMENT. —  An  insurance  company,  having  made  a  deposit  of  funds 
with  the  superintendent  of  insurance,  for  the  security  of  policyholders,  pur- 
suant to  law,  has  no  right  to  make  an  assignment  of  the  same  or  any  part 
thereof.     Attorney-General  Rep.,  1894,  page  223. 

A  deposit  made  by  foreign  insurance  company  with  the  insurance  depart- 
ment cannot  be  transferred  to  be  held  as  a  deposit  for  another  company 
formed  by  consolidation  of  the  depositor  company  and  another  foreign 
insurance  company.     Attorney -General  Rep.,  1892,  page  76. 

A  policy  written  by  the  depositing  company  after  withdrawal  from  busi- 
ness in  this  state  is  protected  by  the  deposit.  Attorney-General  Rep.,  1892, 
page   121. 

Insurance  companies  retiring  from  business  may  withdraw  from  deposit 
with  the  superintendent  of  insurance  all  securities  in  excess  of  an  amount 
sufficient  to  secure  policyholders  in  the  United  States.  Attorney- General 
Rep.,  1893,  page  216. 

CAPITAL  STOCK.— The  capital  tock  of  fire  insurance  companies  of  other 
states  must  be  fully  paid  up  before  such  companies  can  be  authorized  to  do 
business  here.    Attorney-General  Rep.,   1893,  page  336. 

Departmental  and  United  States  trustee  deposits  made  by  a  foreign  corpo- 
ration, although  transferred  to  Royal  Company  by  indenture  may  not  lawfully 
be  included  as  a  part  of  the  United  States  capital  of  the  Royal  Company  for 
protection  of  its  United  States  policyholders.  Attorney-General  Rep.,  1904, 
page   331. 

A  foreign  life  insurance  company  may  deposit  with  the  superintendent  of 
insurance  bonds  of  the  government  under  which  it  is  organized,  provided 
such  government  accepts  from  our  insurance  companies  seeking  to  do  business 
there  government  bonds  of  the  United  States  or  of  this  state.  Attorney- 
General  Rep.,  1893,  page  242. 


38  The  Insurance  Law.  §  28. 

Deposits  made  by  a  foreign  company  which  failed  to  obtain  a  renewal  are 
held  as  secm-ity  only  for  policies  issued  during  the  period  the  company  was 
authorized  to  do  business,  and  when  such  risks  have  been  liquidated  the 
deposits  should  be  returned.     Attorney -General  Rep.,   1902,  page   174. 

§  28.    Special  deposit  required  in  certain  cases. 

No  insurance  corporation,  incorporated  by  or  existing  under  the 
government  or  laws  of  other  countries  than  the  United  States, 
except  co-operative  life  and  fraternal  beneficiary  insurance  cor- 
porations, shall  transact  any  business  of  insurance  in  this  state, 
unless,  if  it  transact  fire  or  marine  insurance  business  in  this  state, 
it  has  deposited  with  the  superintendent  of  insurance,  for  the 
benefit  and  security  of  its  policy  holders  in  the  United  States,  a 
sum  not  less  than  two  hundred  thousand  dollars  invested  as  in 
this  chapter  required,  or  if  it  transact  in  this  state  one  or  more  of 
the  kinds  of  insurance  business  specified  in  section  seventy  of  this 
chapter,  it  has  deposited  with  the  superintendent  of  insurance,  for 
like  purposes  such  amount  as  may  be  required  of  domestic  insur- 
ance corporations  doing  the  same  kinds  of  business.  A  foreign 
insurance  corporation  incorporated  by  or  existing  under  the  gov- 
ernment or  laws  of  any  country  outside  of  the  United  States, 
authorized  to  transact  the  business  of  fire  insurance  in  this  state, 
may  be  authorized  to  transact  the  business  of  ocean  marine  insur- 
ance, provided  it  makes  an  additional  deposit  with  the  superin- 
tendent of  insurance  of  two  hundred  thousand  dollars  in  deposit 
securities,  and  files  with  the  insurance  department  annually  a  sep- 
arate financial  statement  for  each  class  of  business. 

Source. — 'Former  §  28;  originally  revised  from  L.  1849,  chap.  308,  §  7;  L. 
1853,  chap.  463,  §  15,  as  amended  by  L.  1802,  chap.  300;  L.  1853,  chap.  4G0, 
§  23,  as  amended  by  L.  1875,  chap.  555;  L.  1877,  chap.  439,  §  1,  as  amended  by 
L.  1881,  chap.  C28;  L.  1880,  chap.  428,  §  1. 

Amended  by  L.  1910,  chap.  634. 

See  5  11,  ante.  Examination  into  affairs  of  corporation  by  superintendent 
of  insurance. 

General  Accident  Insurance  Company  of  Philadelphia  must  deposit  the  same 
amount  in  the  state  of  Pennsylvania  as  is  required  of  a  similar  domestic  cor- 
poration in  this  state,  in  order  to  secure  renewal  of  licence  to  do  business 
inthin  this  State.    Attorney-General  Rep.,  1906,  page  529. 

The  protection  afforded  by  a  deposit  made  by  a  foreign  insurance  company 
with   the   Superintendent   of  Insurance   for   the  benefit  and  security  of  its 


§  29.  Genekal  Provisions.  39 

policylholders  in  the  United  States,  includes  policyiholders  in  Porto  Rieo. 
Attorney -General  Kep.,  March  27,  1912;  and  the  Philippine  Islands,  July  20, 
1915. 

WITHDRAWAL  OF  DEPOSIT.— Insurance  companies  retiring  from  busi- 
ness may  withdraw  from  deposit  with  the  superintendent  of  insurance  all 
securities  in  excess  of  an  amount  sufficient  to  secure  policyholders  in  the 
United  States  which  are  held  in  trust  for  all  such  policyholders.  Attorney- 
General  Rep.,   1893,  page  216. 

An  insurance  company,  having  made  a  deposit  of  funds  with  the  super- 
intendent of  insurance,  for  the  security  of  policyholders,  pursuant  to  law, 
has  no  right  to  make  an  assignment  of  the  same,  or  any  part  thereof. 
Attorney-General  Rep.,   1894,  page  223. 

Deposits  made  by  a  foreign  company  which  failed  to  obtain  a  renewal 
are  held  as  securities  only  for  policies  issued  during  the  period  the  company 
was  authorized  to  do  business,  and  when  such  risks  have  been  liquidated  the 
deposits  should  be  returned.    Attorney-General  Rep.,  1902,  page  174. 

The  Superintendent  of  Insurance  sihould  not  surrender  to  a  foreign  fire  in- 
surance company  the  securities  on  deposit  for  the  benefit  of  policyholders  in 
the  United  States,  until  he  is  satisfied  that  every  policy  in  any  of  the  posses- 
sions of  the  United  States  has  run  out  by  expiry  or  cancellation.  Attorney- 
General  Rep.,  1903,  page  424. 

ESTOPPEL. —  If,  at  the  time  of  an  assignment  of  a  mortgage  to  the  super- 
intendent as  a  part  of  the  deposit,  the  mortgagor  states  that  the  whole 
sum  is  due  and  that  there  is  no  legal  or  equitable  defense  to  the  mortgage, 
the  mortgagor  is  estopped  from  setting  up  the  defense  of  usury.  Smyth  v. 
Lombardo,   15  Hun,  415. 

Where  the  superintendent  has  accepted  from  a  company  an  assignment 
of  a  mortgage  as  a  part  of  the  deposit,  on  the  faith  of  a  representation  on 
the  part  of  the  mortgagor  that  there  is  no  legal  or  equitable  defense  to  the 
same,  the  mortgagor  is  estopped  from  setting  up  such  a  defense.  Smyth 
v.  Munroe,  84  N.  Y.,  354. 

EXCESS. —  When  a  greater  sum  than  the  minimum  required  is  deposited, 
the  superintendent  holds  the  excess  in  trust  and  the  excess  cannot  be  with- 
drawn until  the  conditions  of  the  trust  have  been  complied  with.  L.  Ins. 
Co.  V.  Maxwell,  131  N.  Y.,  286. 

§  29.    Copy  charter  and  verified  statement  to  be  filed. 

No  foreign  insurance  corporation  shall  transact  any  business  of 
insurance  in  this  state  until  it  has  filed  in  the  office  of  the  super- 
intendent of  insurance  a  certified  copy  of  its  charter  or  deed  of 
settlement  with  a  verified  detailed  statement  of  all  the  items, 
matters  and  other  information  in  regard  to  its  affairs  required 
by  law  to  be  stated  in  the  annual  report  of  a  similar  domestic 
insurance  corporation,  made  as  of  such  date  as  the  superintendent 


40  The  Insurance  Law.  §  30. 

may  require,  and  an  agreement  under  its  corporate  seal  that  it  will 
not,  while  authorized  to  do  business  in  this  state,  transact  any  busi- 
ness therein  which  a  similar  domestic  insurance  corporation  is  pro- 
hibited from  transacting. 

Source. — Former  §  29;  originally  revised  from  L.  1853,  chap.  463,  §  15,  as 
amended  by  L.  1862,  chap.  300;  L.  1853,  chap.  466,  §  23,  as  amended  by  L.  1875, 
chap.  555;  L.  1880,  chap.  428,  §  2. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate   of   authorization   by   superintendent. 

See  §  31,  post  Agent  not  to  transact  business  until  certificate  is  filed 
in  county  clerk's  ofiicp 

See  §  32,  post.    Renewal  of  certificate. 

See  §  49,  post.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  50,  post.    Agent's  certificate  of  authority. 

See  §  53,  post.     Penalty  for  violation  of  Insurance  Law. 

See  §  54,  post.    Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.     Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law,  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another 
state  of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep., 
1895,  page  56. 

CAPITAL  STOCK.— The  capital  stock  of  foreign  credit  guarantee  com- 
panies must  be  paid  in,  in  cash,  one-third  thereof  within  one  year  and  the 
other  two-thirds  thereof  within  two  years  from  their  incorporation.  Attor 
uey-General  Rep.,  1893,  page   164. 

§  30.    Appointment  of  Attorney. 

No  foreign  insurance  corporation  shall  transact  any  business  of 
insurance  in  this  state  until  it  has  executed  and  filed  in  the  office 
of  the  superintendent  of  insurance  a  written  apjx)intment  of  the 
superintendent  to  be  the  true  and  lawful  attorney  of  such  corpora- 
tion in  and  for  this  state,  upon  whom  all  lawful  process  in  any 
•action  or  proceeding  against  tlie  corporation  may  be  served  with 
the  same  effect  as  if  it  was  a  domestic  corporation.  Service  upon 
such  attorney  shall  tliereafter  be  deemed  service  upon  the  corpo- 
ration. 

Source. — Former  §  30;  originally  revised  from  L.  1853,  chap.  463,  §§  14,  15, 
as  amended  by  L.  1862,  chap.  300;  L.  1853,  chap.  466,  §  23,  as  amended  by  L. 
1875,  chap.  555;  L.  1884,  ohap.  346,  §  1. 

Amended  by  L.  1910,  chap.  634. 


§  30.  Genekal  Provisions.  41 

The  ainriuliiuut  of  1910,  chap.  034,  re'ixialod  the  provision  requiring  the 
superintendent  to  revoke  the  license  of  any  authorized  foreign  corporation 
which  removed  a  suit  brought  against  it  from  the  State  to  tlie  United  States 
courts. —  Ed. 

Sec  §  1199,  Penal  Law.  Acting  for  foreign  insurance  company  which  has 
not  designated  superintendent  of  insurance  as  attorney. 

\\  ithin  the  meaning  of  the  Insurance  Law,  a  foreign  corporation  includes 
one  incoriwrated  under  the  laws  of  another  state  of  the  Uiwted  States;  if 
such  companies  were  admitted  to  do  business  in  tliis  stuU'  prior  to  May  17, 
1887,  they  are  entitled  to  immunity  from  the  penalty  prescribed  in  section  30. 
Tn  re  Ponn.  Fire  Ins.  Co.,  Attorney-General  Rep.,   1895,  page  56. 

The  words  "  remove  into  the  United  States  "  courts  do  not  apply  to  cases  on 
appeal,  but  to  cases  removed  on  petition  of  defendant  before  pleading  is 
filed.    Ruling  Ins.  Dept.,  Apr.  27,  1910. 

LABOR  DAY. —  The  superintendent  in  receiving  and  admitting  service  of 
process  acts  as  an  agent  of  the  corporation  and  not  as  an  officer  of  the  state; 
and  service  upon  him  on  Labor  Day  is  valid.  Flynn  v.  Union  Surety  and 
Guar.  Co.,  170  N.  Y.,  145. 

JUSTICE'S  COURT. —  In  justice's  court  a  summons  may  be  served  on  the 
local  agent,  provided  no  other  person  resides  in  the  county  on  whom  service 
might  be  made  and  no  person  has  been  designated  to  accept  service.^  Murray 
V.  Am.  Casualty  Co.,  88  App.  Div.,  224. 

The  appointment  of  the  state  superintendent  of  insurance  as  the  attorney 
of  a  non-resid€nt  insurance  company  for  the  purpose  of  receiving  service  of 
process  as  required  by  Laws  N*.  Y.,  1884,  chap.  346,  sec.  1,  does  not  authorize 
him  to  accept  service  by  mail,  and  such  service  is  void.  Farmer  v.  National 
Life  Assn.  of  Hartford,  Conn.,  Circuit  Court,  E.  D.,  Xew  York,  May  10,  1892; 
50  Federal  Reporter,  829. 

CITY  COURT  OF  NEW  YORK.— The  summons  in  an  action  in  the  City 
Court  of  New  York  against  a  foreign  insurance  company  may  be  served  in 
the  city  of  Albany  on  the  superintendent  of  insurance  at  his  office.  People 
v.  Justices  of  City  Court,  25  Abb.  N.  a,  403. 

INSUFFICIENT  APPOINTMENT.— A  certificate  of  appointment,  not  giv- 
ing the  individual  name  of  the  superintendent  is  sufficient.  Lafflin  v.  Trav- 
elers' Ins.  Co.,  121  N.  Y.,  713. 

DEPUTY. —  A  service  of  a  summons  and  complaint  upon  a  life  insurance 
company  upon  the  deputy  at  the  ofiice  of  the  superintendent  is  good  although 
it  is  not  shown  that  such  deputy  was  specifically  designated  as  a  person 
upon  whom  service  could  be  made.  Quinn  v.  Royal  Ins.  Co.,  81  Hun,  207; 
30  N.  Y.  Supp.,  714;  62  St.  Rep.,  738. 

EFFECT  OF  SERVICE  ON  SUPERINTENDENT.— For  the  purposes  of 
an  action  brought  to  enforce  a  policy  of  a  foreign  corporation  it  is  deemed 
an  inhabitant  of  this  state,  and  service  upon  it  by  delivering  the  summons 
to  the  superintendent  is  as  effective  as  though  made  on  the  defendant 
personally.     Steele  v.  Conn    Gen.  Life  Ins.  Co.,  31  App.  Div.,  389. 


42  The  Insurance  Law.  §  30. 

WTiere  a  foreign  fire  insurance  company  has  designated  an  agent  in  con- 
formity with  this  section,  it  thereby  submits  itself  to  the  jurisdiction  of 
the  state  courts  having  authority  to  act,  and-  a  valid  judgment  may  be 
rendered  capable  of  being  enforced  upon  any  property  of  the  insurance  com- 
pany within  this  state.     Gibbs  v.  Queens  Ins.  Co.,  63  N.  Y.,  114. 

While  a  state  may  authorize  the  seizure  and  sale  by  means  of  appropriate 
legal  proceedings,  of  property  of  a  foreign  insurance  company  within 
its  jurisdiction,  it  cannot  subject  to  its  laws  the  property  of  the  company 
out  of  its  jurisdiction.    Douglass  v.  Phenix  Ins.  Co.,  138  N.  Y.,  209. 

A  State  may  designate  the  officer  or  agent  on  whom  service  of  process  may 
be  made  within  such  State,  in  actions  or  proceedings  against  a  foreign  corpora- 
tion doing  business  within  such  State,  and  service  upon  such  person  is  as 
valid  as  service  upon  the  corporation.  The  Lafayette  Ins.  Co.  v.  French,  18 
How.  (U.  S.),  404. 

SECTION  16,  GENERAL  CORPORATION  LAW.— This  section  does  not 
preclude,  even  where  there  has  been  a  written  appointment  of  the  superin- 
tendent of  insurance,  any  other  legal  methods  of  service  upon  it,  and  where 
service  has  been  made  upon  it  under  subd.  3  of  §  432  of  the  Code  of  Civil  Pro- 
cedure, such  service  is  good.    Howard  v.  Prudential  Ins.  Co.,  1  App.  Div.,  135. 

This  section  requiring  a  designation  of  the  superintendent  of  insurance 
does  not  preclude  service  under  §  432  of  the  Code  of  Civil  Procedure.  Silver 
V.  Western  Assur.  Co.,  3  App.  Div.,  573. 

CONSTITUTIONALITY.— An  agreement  of  an  insurance  company,  as  a 
condition  of  transacting  business  in  a  certain  state,  to  abstain  in  all  cases 
from  resorting  to  the  federal  court  is  void  as  against  public  policy  and  in 
conflict  with  the  constitution  of  United  States;  but  a  state  has  the  right 
to  impose  conditions,  not  in  conflict  with  the  constitution  or  the  laws  of 
United  States,  to  the  transaction  of  business  within  its  territory  by  an 
insurance  company  organized  under  the  laws  of  another  state,  or  if  such 
company   has    been   given    a   license,   to   revoke   it,   with   or   without   cause. 

Doyle  V.  Continental  Ins.  Co.,  94  U.  S.,  535;  Insurance  Company  v.  Morse, 
20  Wall.,  445;  Barron  v.  Burnside,  121  U.  S.,  186;  Hooper  v.  California, 
155  N.  Y.,  652. 

Statutes  requiring  foreign  corporations,  as  a  condition  of  doing  business 
within  a  State,  to  stipulate  not  to  remove  into  the  courts  of  the  United 
States  suits  brought  against  them  in  the  courts  of  the  State,  have  been 
adjudged  to  be  unconstitutional  and  void.  Blake  v.  McClung,  172  U.  S.,  239; 
see  also  Commonwealth  v.  E.  Tenn.  Coal  Co.,  97  Ky.,  224;  People,  etc.,  v. 
Payson,  151  111.,  101. 

An  agreement  to  abstain  in  all  cases  from  resorting  to  the  courts  of  the 
United  States  is  void  as  against  public  policy  and  in  conflict  with  the  United 
States  Constitution.    Doyle  v.  Continental  Ins.  Co.,  94  U.  S.,  535. 

The  superintendent  should  not  file  the  designation  by  a  foreign  insurance 
corporation  not  authorized  to  transact  business  in  this  state,  until  such  cor- 
poration shall  have  received  the  certificate  of  authorization  of  the  superin- 


§31.  General  Provisions.  43 

tendent  of  insurance  as  specified  in  §  9  of  the  Insurance  Law,  which  could 
only  be  issued  after  deposit  of  securities  with  the  superintendent  or  the  fur- 
nishing to  him  of  the  statutory  certificate  of  the  due  deposit  of  the  proper 
amount  (and  class  of  character)  of  securities  with  the  proper  public  official  in 

the  home  state,  as  required  by  §§  11  andi  26  herein.  Attorney-General  Rep., 
Jan.  9,   1909. 

§  31.  Certified  copy  of  superintendent's  certificate  to  be 
filed  in  the  clerk's  office. 

No  agent  of  any  foreign  insurance  corporation  for  the  first 

year  it  is  admitted  to  transact  business  in  this  state  shall  transact 

any  business  of  insurance  in  this  state  until  he  has  filed  in  the 

office  of  the  clerk  of  the  county  where  he  resides,  a  certified  copy 

of  the  superintendent's  certificate  of  authority  to  do  business, 

and  until  there  has  been  published  in  a  paper  at  Albany,  in  which 

notices  by  officers  are  authorized  by  law  to  be  published  for  four 

successive  weeks  after  such  filing,  a  copy  of  such  certificate  and 

of  the  statement  required  by  this  chapter  to  be  filed  in  the  office 

of  the  superintendent  and  proof  of  such  publication  shall  be  filed 

in  the  office  of  the  superintendent  within  thirty  days  thereafter, 

by  an  affidavit  of  the  publisher  of  the  newspaper,  his  foreman  or 

clerk. 

Source. — Former  §  31,  as  amended  by  L.  1907,  chap.  285;  originally  revised 
from  L.  1853,  chap.  463,  §§  14,  15,  as  amended  by  L.  1862,  chap.  300;  L.  1853, 
chap.  466,  §  23,  as  amended  by  L.  1875,  chap.  555. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate  of  authorization  by  superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  in 
office  of  superintendent  of  insurance. 

See  §  32,  post.    Renewal  of  certificate. 

See  §  49,  post.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  50,  post.    Agent's  certificate  of  authority. 

See  §  53,  post.    Penalty  for  violation  of  Insurance  Law. 

See  §  54,  post.    Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.    Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

See  §§  82,  83.    Executive  Law,  chap.  23  of  1909.    Designation  of  state  paper. 

FOREIGN  CORPORATION.— Within  the  meaning  of  the  Insurance  Law  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another 
state  of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep., 
1895,  page  56. 


44  The  Insurance  Law.  §  32. 

DELIVERY  OF  THIS  POLICY.— A  citizen  of  this  state  is  not  prohibited 
from  making  an  application  to  a  foreign  insurance  company  not  authorized 
to  do  business  in  this  state  for  insurance,  nor  from  receiving  the  policy  here 
by  mail,  but  an  agent  of  the  foreign  company  is  prohibited  from  making  a 
delivery  of  such  policy.    People  v.  Imlay,  20  Barb.,  68. 

BROKETIS. —  A  policy  of  insurance  in  a  Canadian  company,  which  has 
never  been  licensed  under  §  50  of  the  Insurance  Law  to  do  business  in 
this  state,  and  which  had  no  business  existence  in  Canada  when  application 
for  the  policy  was  made,  procured  by  insurance  brokers  doing  business  in 
the  city  of  New  York,  is  void,  and  the  act  of  the  brokers  procuring  it  is, 
under  §  1199  of  the  Penal  Law,  a  misdemeanor,  and  renders  them  liable 
to  the  party  insured  for  the  injury  sustained  by  him.  Burges  v.  Jackson, 
18   App.   Div.,   296. 

PENALTY. —  One  acting  within  this  state  as  the  agent  in  receiving  and 
procuring  applications  for  insurance  for  a  foreign  company  which  has  not 
filed  proper  certificates  is  liable  to  a  penalty.    People  v.  McCann,  67  N.  Y.,  50G. 

POLICY  NOT  VOID.— The  failure  on  the  part  of  a  foreign  insurance  com- 
pany to  do  the  acts  required  under  this  section  does  not  render  the  policy 
issued  by  it  void.     Marshall  v.  Reading  Fire  Ins.  Co.,  78  Hun,  83. 

AGENTS. —  Corporations  may  act  as  agents  for  insurance  companies  when 
expressly  authorized  so  to  do  by  their  charters,  and  not  otherwise.  Attorney- 
General  Rep.,  1893,  page  369. 

One  certifiedi  copy  of  the  certificate  of  incorporation  to  one  agent  in  each 
county  is  sufficient.     Ruling  Ins.  De.pt.,  June  16,  1914. 


§  32.    Renewal  of  certificate  of  autiiority;  revocation. 

The  certificate  of  authority  granted  by  the  superintendent  of  in- 
surance, pursuant  to  the  provisions  of  tliis  chapter,  to  a  foreign  in- 
surance corporation  to  do  business  in  this  state,  shall  not  remain 
in  force  for  a  longer  period  than  one  year,  and  all  such  certifi- 
cates shall  expire  on  the  thirtieth  day  of  April  of  the  year 
next  following  the  date  of  issue.  Th,e  statements  and  evi- 
dences of  investment  required  by  this  chapter  to  be  filed  in  tlie 
office  of  the  superintendent  before  a  certificate  of  authority  i& 
granted  to  a  foreign  corporation,  shall  be  renewed  from  year  to 
year,  in  such  manner  and  form  as  the  superintendent  may  require, 
with  an  additional  statement  of  the  amount  of  premiums  received 
and  losses  sustained  in  this  state  during  the  preceding  year  so  long 
as  such  authority  continues.  If  the  superintendent  is  satisfied  that 
the  capital,  securities  and  investments  remain  secure,  and  tbat  it 
may  be  safely  intrusted  with  a  continuance  of  its  authority  to  do 


§  32.  General  Provisions.  45 

business,  he  shall  grant  a  renewal  of  such  certificate  of  authority. 
Whenever  in  the  judgment  of  the  superintendent  of  insurance  it 
will  best  promote  the  interests  of  the  people  of  this  state,  he  may, 
after  a  hearing  on  notice,  revoke  the  certificate  of  authority  of  a 
foreign  corporation  to  do  business  in  this  state,  prior  to  its  expira- 
tion under  this  section.  The  action  of  the  superintendent  of  in- 
surance in  revoking  the  certificate  of  authority  of  a  foreign  cor- 
poration shall  be  subject  to  review  by  writ  of  certiorari. 

Source. — Former  §  32,  as  amended  by  L.  1893,  chap.  725;  originally  revised 
from  L.  1853,  chap.  463,  §§  14,  15,  as  amended  by  L.  1862,  chap.  300;  L.  1853, 
chap.  466,  §  23,  as  amended  by  L.  1875,  chap.  555. 

Amended  by  L.  1909,  chap.  301,  and  L.  1913,  chap.  9. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  9  of  1913 
was  to  give  the  Superintendent  of  Insurance  the  power  to  revoke  the  cer- 
tificate of  authority  of  a  foreign  corporation  whenever  in  his  judgment  the 
best  interests  of  the  people  would  be  promoted. — Ed. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate  of  authorization  by  superintendent.  * 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  in 
office  of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  filed 
in  county  clerk's  office. 

See  §  49,  post.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  50,  post.    Agent's  certificate  of  authority. 

See  §  53,  post.     Penalty  for  violation  of  Insurance  Law. 

See  §  54,  post.     Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.     Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another  state 
of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-^jleneral  Rep.,  1895, 
page  56. 

MANDAMUS. —  The  court  will  not,  on  mandamus  to  the  superintendent 
of  insurance,  direct  him  to  file  the  annual  statement  of  an  insurance  com- 
pany of  another  state,  and  issue  a  renewal  certificate  to  its  agent,  if  it 
appear  that  he  has  received  and  examined  the  annual  statement,  and  has 
disapproved  the  condition  of  the  company  exhibited  thereby.  People  ex  rel. 
Hartford  Co.  v.  Fairman,  12  Abb.  N.  C,  252. 

The  superintendent  has  the  right  to  refuse  to  renew  the  license  of  a  foreign 
company  unless  it  complies  with  the  statute.  In  re  General  I.  Co.,  Attorney- 
General  Rep.,  Jan.  8,  1906. 


46  The  Insurance  Law.  §  33. 

§  33.    Reciprocal  requirements. 

If,  by  the  existing  or  future  laws  of  any  state,  an  insuranc^^  cor- 
poration of  this  state  having  agencies  in  such  other  state  or  the 
agents  thereof,  shall  be  required  to  make  any  deposit  of  securities 
in  such  other  state  for  the  protection  of  policy  holders  or  otherwise, 
or  to  make  payment  for  taxes,  fines,  penalties,  certificates  of  author- 
ity, license  fees  or  otherwise,  greater  than  the  amoimt  required  by 
this  chapter  from  similar  corporations  of  such  other  state  by  the 
then  existing  laws  of  this  state,  then  and  in  every  such  case, 
all  insurance  corporations  of  such  state,  established  or  heretofore 
having  established  an  agency  in  this  state  shall  be  and  they  are 
hereby  required  to  make  the  like  deposit  for  the  like  purposes 
in  the  insurance  department  of  this  state,  and  to  pay  the  super- 
intendent of  insurance  for  taxes,  fines,  penalties,  certificates 
of  authority,  license  fees  and  otherwise,  an  amount  equal  to  the 
amount  of  such  charges  and  payments  imposed  by  the  laws  of  sudi 
other  state  upon  the  insurance  corporations  of  this  state  and  the 
agents  thereof. 

The  superintendent  of  insurance  may  remit  any  of  the  fees  and 
charges  which  he  is  required  by  law  to  collect,  except  such  as  he  is 
required  to  collect  by  virtue  of  this  section ;  but  no  discrimination 
shall  be  made  in  favor  of  one  corporation  over  another  from  the 
same  state  or  country. 

Whenever  it  shall  appear  to  the  superintendent  of  insurance  that 
permission  to  transact  business  within  any  state  of  the  United 
States  or  within  any  foreign  country  is  refused  to  a  company  organ- 
ized under  the  laws  of  this  state,  after  a  certificate  of  the  solvency 
and  good  management  of  such  company  has  been  issued  to  it  by  the 
said  superintendent  and  after  such  company  has  complied  with 
any  reasonable  laws  of  such  state  or  foreign  country  requiring  de- 
posits of  money  or  securities  with  the  government  of  such  state  or 
country,  then  and  in  every  such  case,  the  superintendent  may  fortJi- 
with  cancel  the  authority  of  every  company  organized  under  tlie 
laws  of  such  state  or  foreign  government,  and  licensed  to  do  busi- 
ness in  this  state,  and  may  refuse  a  certificate  of  autJiority  to  every 
such  company  tliereafter  applying  to  him  for  authority  to  do  busi- 


§  34.  General  Provisions.  47 

ness  in  this  state,  until  his  certificate  shall  have  been  duly  recog- 
nized by  the  government  of  such  state  or  country. 

Source.— Former    §    33,    as   amended   by   L.    1896,   chap.    23,   and   L.    1906, 

chap.  326;  originally  revised  from  L.  1865,  chap.  694,  as  amended  by  \j.  1875, 
chap.  60. 

FOREIGN  CORPORATION.—  Within  the  meaning  of  the  Insurance  Law  a 

forei£?n  corporation  includes  one  incorporated  under  the  laws  of  another  state 
of  fhe  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Eep.,  1895, 
page  56. 

CONSTITUTIONALITY.— Chapter  694  of  1865,  providing  that  an  insur- 
ance corporation  of  another  state  seeking  to  do  business  here  shall  pay  to 
the  superintendent  for  taxes,  fines,  etc.,  an  amount  equal  to  that  imposed 
by  the  existing  or  future  laws  of  the  state  of  its  origin,  upon  companies 
of  this  state  seeking  to  do  business  there,  when  such  amount  is  greater  than 
that  required  for  such  purposes  by  the  then  existing  laws  of  this  state,  is 
not  an  unlawful  delegation  of  legislative  power.  People  v.  Fire  Ass'n  of 
Philadelphia,  92  N.  Y.,  311;  aff'g  29  Hun,  205;  aff'd  in  119  U.  S.,  110. 

An  act  requiring  foreign  insurance  companies  doing  business  in  the  city 
of  New  York  to  pay  to  it  a  percentage  of  premiums  is  constitutional. 
Trustees  of  Exempt  Firemen's  B.  Fund  v.  Roome,  93  N.  Y.,  313;  aff'g  29 
Hun,  391. 

§  34.    Taxation  of  foreign  corporations. 

The  capital  of  an  insurance  corporation  incorporated  under  the 
laws  of  any  state  or  country  outside  of  the  United  States,  to  the  ex- 
tent employed  in  the  transaction  of  business  in  this  state,  and  as 
determined  and  certified  as  prescribed  by  section  twenty-seven  of 
this  chapter,  shall  be  subject  to  taxation  the  same  as  the  capital  of  a 
like  domestic  insurance  corporation,  to  be  levied,  assessed  and  col- 
lected, as  prescribed  by  law,  at  such  place  in  the  state  as  it  shall 
have  its  principal  office.  Upon  satisfactory  proof  to  the  superin- 
tendent of  insurance  that  any  foreign  insurance  corporation  ha.Q 
neglected  or  refused  to  pay  any  tax  levied  and  assessed  under  the 
laws  of  this  state,  he  shall  revoke  any  certificate  of  authority 
granted  by  him  to  such  corporation  to  do  business  in  this  state,  and 
it  shall  tliereafter  be  precluded  from  doing  business  herein.  Every 
health  or  casualty  insurance  corporation  incorporated  by  or  organ- 
ized under  the  laws  of  any  government  outside  the  United  States 
engaged  in  the  transaction  of  the  business  of  health  or  casualty 
insurance  in  this  state  under  a  certificate  of  authority  from  the 
superintendent  of  insurance  shall  annually  on  or  before  the  first 


48  The  Insurance  Law.  §  34. 

day  of  March,  pay  to  the  superintendent  of  insurance  a  tax  of 
two  per  centum  on  all  premiums  received  in  cash  or  otherwise  by 
its  attorneys  or  agents  in  this  state  during  the  year  ending  on  the 
preceding  thirty-first  day  of  December,  for  business  done  at  any 
time  in  this  state  on  risks  resident  therein.  Every  life  insurance 
corporation  incorporated  by  or  organized  under  the  laws  of  any 
government  outside  of  the  United  States  engaged  in  the  transac- 
tion of  the  business  of  life  insurance  in  this  state  under  a  cer- 
tificate of  authority  from  the  superintendent  of  insurance  shall 
annually  on  or  before  the  first  day  of  March,  pay  to  the  superin- 
tendent of  insurance  a  tax  of  one  per  centum  on  all  premiums  re- 
ceived in  cash  or  otherwise  by  its  attorneys  or  agents  in  this  state 
during  the  year  ending  on  the  preceding  thirty-first  day  of  De- 
cember, for  business  done  at  any  time  in  this  state  on  risks  resident 
therein.  If  any  such  corporation  shall  neglect  or  refuse  to  pay 
such  tax,  the  superintendent  shall  collect  the  same  out  of  the  in- 
terest on  the  stocks  or  securities  deposited  in  the  insurance  depart- 
ment. The  agent  of  every  corporation,  association  or  individual 
not  incorporated  by  the  laws  of  this  state  to  effect  insurances 
against  marine  risks  shall  annually,  on  or  before  the  first  day  of 
February,  pay  to  tbe  superintendent  of  insurance  a  tax  of  two  per 
centum  upon  the  amount  of  all  premiums  upon  insurances  against 
marine  risks  which  have  been  received  by  such  agent  or  any  per- 
son for  him  or  have  been  agreed  to  be  paid  for  any  such  insurance 
affected  or  agreed  to  be  affected  or  procured  by  him,  within  this 
state,  for  the  year  ending  the  tbirty-first  day  of  December  pre- 
ceding. In  ascertaining  the  amount  of  premiums  upon  which 
said  two  per  centum  tax  is  to  be  levied,  there  shall  be  deducted 
from  the  premiums  aforesaid,  on  account  of  reinsurances,  such 
portion  of  the  premiums  upon  said  reinsurances  as  may  have  been 
paid  to  companies  that  are  subject  to  the  payment  of  the  tax 
hereby  provided  for,  but  no  credit  or  deduction  shall  be  allowed 
on  account  of  such  reinsurances  where  any  part  of  the  rislr 
insured  against  is  reinsured  in  a  corporation  authorized  to  effect 
insurances  against  fire  or  in  the  fire  insurance  branch  of  a  cor- 
poration authorized  to  effect  insurances  against  both  marine  and 
fire  risks. 


§  34.  General  Provisions.  49 

Source.— Former  §  34,  as  amended  by  L.  1893,  chap.  725,  and  L.  1904. 
chap.  708;  originally  revised  from  R.  S.,  pt.  1,  chap.  22,  tit.  21,  §  3,  as 
amended  by  L.  1837,  chap.  30;  L.  1853,  chap.  463,  §  15,  as  amended  by  L.  18G2, 
chap.  300;  [L.  1871,  diap.  888,  §  7;  L.  1882,  chap.  371. 

Amended  by  L.  1910,  chap.  634,  and  I.  1911,  chap.  766. 

FOREIGN  CORPORATION.— Within  the  meaning  of  the  insurance  law,  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another  state 
of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep.,  1895, 
page  56. 

DOING  BUSINESS. —  Receiving  renewal  premiums  on  policies  already  in 
force,  by  mail,  directly  from  the  policy  holders,  under  provisions  in  the 
policies  that  the  premiums  were  payable  in  another  State,  is  not  "doing 
business  "  within  a  State.  State  v.  Conn.  Mut.  Life  Ins.  Co.,  61  S.  W.  Rep., 
75. 

FRANCHISE  TAX. — A  foreign  marine  insurance  company  doing  business 
in  this  state  must  pay  the  annual  tax  imposed  by  §  187  of  the  tax  law 
and  is  not  entitled  to  have  it  deducted  from  other  taxes  paid  by  the  com- 
pany under  the  provisions  of  this  section  of  the  Insurance  Law.  People  v. 
Thames  &  Mersey  M.  Ins.  Co.,  176  N.  Y.,  531. 

The  franchise  tax  assessed  pursuant  to  §  187  is  not  to  be  deducted 
from  the  tax  assessed  pursuant  to  §  32.  Attorney-General  Rep.,  1902, 
page  164. 

TAX. —  Section  187  of  the  tax  law,  authorizing  an  annual  tax  upon  the 
gross  amount  of  premiums  received  during  the  preceding  calendar  year  by 
every  domestic  insurance  company,  for  the  privilege  of  exercising  corporate 
franchises  and  carrying  on  business  in  this  state,  to  be  paid  over  before 
the  first  day  of  June  in  each  year,  is  not  retroactive,  but  prospective  in  its 
operation,  and  imposes  a  tax  not  upon  premiums  derived  from  contracts 
made  prior  to  the  time  the  statute  took  effect,  but  upon  future  businesr 
only.    People  ex  rel.  Assur.  Soc.  v.  Miller,  179  N.  Y.,  227. 

MARINE  INSURANCE. —  A  foreign  marine  insurance  company  is  entitled 
by  virtue  of  §  22  of  the  Insurance  Law  to  exemption  from  taxation 
upon  premiums  paid  by  it  for  reinsurance.  People  v.  Reliance  Marine  Ins. 
Co.,  70  Hun,  554. 

The  taxes  paid  by  a  foreign  marine  insurance  corporation  to  the  super- 
intendent of  insurance  are  based,  not  upon  the  residence  of  the  owner  of  the 
hulls  or  the  merchandise  insured,  nor  upon  the  particular  point  at  which 
the  insurance  "commences  to  attach,"  but  wholly  upon  the  "premiums 
upon  insurances  against  marine  risks  which  have  been  received  by  the  agent 
of  such  company,  or  any  person  for  him,  or  have  been  agreed  to  be  paid 
for  any  such  insurance,  effected  or  agreed  to  be  effected  or  procured  by  him 
within  this   state."    Attorney-General  Rep.,   1904,  page   250. 

DEDUCTION. —  An  insurance  company  is  not  entitled  to  a  deduction  on 
account  of  reinsurance  made  by  it  in  Lloyds  winch  is  not  amenable  and 
has  not  paid  the  tax  provided  for  by  §  34.  In  re  Standard  Marine 
Insurance  Company,  Attorney-General  Rep.,  1896,  page  151. 


50  The  Insurance  Law.  §  35. 

LLOYDS. —  The  agent  of  the  United  States  Lloyds  underwriting  marine 
insurance  in  this  state  are  liable  to  the  payment  of  the  tax  of  two  per 
cent  imposed  by  §  34  of  the  Insurance  Law.  Prior  statutes  imposing  a 
similar  tax  are  probably  applicable  to  them,  but  cannot  be  enforced  by 
superintendent   of   insurance.    Attorney -General   Rep.,    1899,   page   379. 

The  provisions  of  §  523  of  the  New  York  Consolidation  Act  apply  to 
an  unincorporated  association  known  under  the  name  of  the  American 
Lloyds.    Fire  Department  v.  Stanton,  177  N.  Y.,  51. 

REINSURANCE. —  The  word  "  reinsurance  "  means  premiums  collected  by 
such  company  for  reinsuring  the  risks  of  other  companies,  and  such  pre- 
miums are  included  in  the  term  "  gross  premiums  received;  "  the  sum  paid 
out  by  such  company  to  other  companies  for  reinsuring  its  own  risks  is 
also  included  and  cannot  be  deducted  from  the  amount  thereof,  since  such 
sum  is  an  expense  of  the  business.  People  ex  rel.  Continental  Co.  v.  Miller, 
177  N.  Y.,  515. 

The  total  amount  of  premiums  received  by  a  foreign  corporation  by  its 
agents  in  this  State,  less  such  part  thereof  as  may  have  paid  a  tax  to  any 
other  State,  are  subject  to  taxation  under  §  34.  Attorney-General  Rep., 
February  17,  1911. 

§  35.    Superintendent  to  forward  process. 

"Whenever  lawful  process  against  an  insurance  corporation  or 
one  or  more  persons  shall  be  served  upon  the  superintendent  of 
insurance  under  the  provisions  of  this  chapter,  he  shall  forthwith 
forward  a  copy  of  such  process  by  mail,  prepaid  and  directed  to 
the  secretary  of  the  corporation  or  to  the  attorney-in-fact  for  such 
person  or  persons,  or,  in  the  case  of  corporations  incorporated 
under  the  ,laws  of  any  foreign  government,  to  the  resident 
manager  or  last  appointed  general  agent  of  the  corporation  in 
this  country. 

For  each  copy  of  process  the  superintendent  shall  collect  the 
sum  of  two  dollars,  which  shall  be  paid  by  the  plaintiff  at  the  time 
of  such  service,  to  be  recovered  by  him  as  part  of  the  taxable  dis- 
bursements if  he  succeeds  in  the  suit.  Provided,  however,  that 
when  one  or  more  underwriters  of  the  same  group  of  Lloyds  or 
inter-insurance  associations  are  joined  in  the  same  suit  or  pra 
ceeding  but  one  copy  of  such  process  shall  be  served. 

Source. — Former  §  35;  originally  revised  from  L.  1884,  chap.  346,  §  2. 
Amended  by  L.  1911,  chap.  502. 


§§  36,  37.  General  Provisions.  51 

§  36.  Officers  and  directors  not  to  be  pecuniarily  interested 
in  transactions. 

No  director  or  officer  of  an  insurance  corporation  doing  busi- 
ness in  this  state  shall  receive  any  money  or  valuable  thing  for 
negotiating,  procuring,  recommending  or  aiding  in,  any  purchase 
by  or  sale  to  such  corporation  of  any  property,  or  any  loan  from 
sucli  eorpoTatioii,  nor  be  }>e€uniarilj  interested,  either  as  prin- 
cipal, coprincipal,  agent,  or  beneficiary,  in  any  such  purdiase,  sale 
or  loan ;  provided  that  nothing  herein  contained  shall  prevent  a 
life  insurance  corporation  from  making  a  loan  upon  a  policy  held 
therein  by  the  borrower  not  in  excess  of  the  net  value  thereof. 

Any  person  violating  any  provision  of  this  section  shall  be  guilty 
of  a  misdemeanor. 

Source. —  Former  §  36,  as  amended  by  L.  1906,  chap.  326. 

See  §  53,  post.    Penalty  imposed  for  violation  of  Insurance  Law. 

See  §§  664,  665,  667,  Penal  Law.  General  provisions  relating  to  officers 
and  directors. 

See  §  1191,  Penal  Law.  Discriminations  by  insurance  corporations  and 
officers. 

See  §  1197,  Penal  Law.  Misconduct  of  officers  and  agents  of  co-operative 
insurance  companies. 

See  §  297,  Penal  Law.    Misconduct  of  directors  of  monied  corporations. 

Section  36  of  the  Insurance  Law  and  §  297  of  the  Penal  Law  are  complete 
and  independent  provisions  and  are  not  required  to  be  construed  together, 
and  §  21  of  the  Penal  Law  is  not  applicable  to  the  construction  of  said 
section  of  the  Insurance  Law;  the  deposit  of  moneys  belonging  to  an  insur- 
ance corporation  in  a  bank  returnable  upon  demand  in  accordance  with  the 
terms  of  certificates  of  deposits  issued  at  the  time  is  not  a  loan  within  the 
meaning  of  said  §  36;  nor  will  a  mere  verbal  promise  not  shown  to  be 
binding  upon  the  bank  that  the  deposit  should  remain  until  a  loan  had 
been  liquidated  bring  the  transaction  within  said  section.  People  v.  Thomas, 
71  Misc.,  339. 

It  is  a  violation  of  the  spirit  of  §  36  for  a  director  of  a  company  to  draw 
plans  and  supervise  the  construction  of  a  building  for  his  company.  Ruling 
Ins.  Dept.,  Oct.  8,  1919. 

§  37.  Corporations  heretofore  formed;  exemption  of  corpo- 
rations subject  to  supervision  of  banking  department. 

Any  domestic  insurance  corporation  heretofore  incorporated  or 
extended  under  the  provisions  of  any  general  or  special  law  of 
the  state  is  hereby  brought  under  all  of  the  provisions  of  this 
chapter  relating  to  such  corporation,  except  that  its  capital  may 
continue  of  the  amount  named  in  its  charter  dui'ing  the  existing 
term  thereof,  unless  it  extends  its  business  to  other  kinds  of  insur- 
ance, and  it  shall  be  entitled  to  all  privileges  granted  by  such 


52  The  Insurance  Law.  §§  38, 39. 

charter  not  authorized  by  this  chapter.  A  greater  number  than  a 
majority  of  the  directors  of  any  such  specially  chartered  corpora- 
tion shall  not  be  required  to  be  residents  of  this  state  notwithstand- 
ing the  provisions  of  any  special  law.  The  provisions  of  this 
article  shall  not  apply  to  any  corporation  subject  to  the  supervision 
of  or  required  by  or  in  pursuance  of  law  to  report  to  the  superin- 
tendent of  banks,  but  any  such  corporation  shall  be  subject  to 
examination  by  the  superintendent  of  insurance  and  shall  make 
such  report  to  him  as  he  shall  require. 

Source. — Former  §  37;  new. 

Amended  by  L.  1910,  chap.  634. 

See  §  52,  post.  Keorganization  of  existing  corporations  and  amendments 
of  certificates. 

SPECIAL  CHARTERS. —  Mutual  fire  insurance  companies  doing  business 
in  this  state  under  special  laws  passed  prior  to  chap.  308  of  1849  have  the 
right  to  transact  business  under  their  original  charters  until  the  same 
expires  by  lapse  of  time.    Attorney-General  Rep.,  1897,  page  148. 

A  marine  insurance  company,  incorporated  by  special  act  before  the  pas- 
sage of  the  first  general  insurance  law  in  1849,  may  extend  its  charter  in 
accordance  with  section  158  of  the  Insurance  Law  and  continue  to  operate 
under  its  original  charter,  subject  to  the  limitations  contained  in  section  37 
of  the  Insurance  Law.     Attorney-General  Rep.,  March  21,  1912. 

§  38.    Fiduciary  capacity  of  agents. 

Every  person  appointed  or  acting  in  this  state  as  agent  of  any 
insurance  corporation  who  receives  or  collects  any  moneys  as  such 
agent,  shall  be  responsible  in  a  trust  or  fiduciary  capacity  to  such 
cor.poration  therefor. 

Source. — Former  §  38;  originally  revised  from  L.  1873,  chap.  688,  §  1. 

RATE. —  A  representation  that  the  rate  charged  by  a  board  of  under- 
writers of  the  city  where  the  property  to  be  insured  is  situated  is  less 
than  it  really  is,  the  insuring  company  treating  the  regular  board  rate  as 
important,  and  delivering  its  policy  on  the  express  agreement  that  it  should 
be  null  and  void  in  case  the  rate  was  higher  than  represented,  is  a  material 
misrepresentation  and  renders  the  policy  void.  Armour  v.  Transatlantic 
Fire  Ins.  Co.,  15  J.  &  S.,  352. 

§  39.    Examiners  and  examinations. 

The  superintendent  of  insurance  shall,  as  often  as  he  deems  it 
expedient,  and,  if  a  domestic  life  or  casualty  insurance  corpora- 
tion, at  least  once  in  three  years,  or,  if  any  other 
domestic  insirrance  corporation,  association,  society  or  order, 
at  least  once  in  five  years,  examine  into  the  affairs  of 
any     insurance     corporation     doing     business     in     this     state, 


§  39.  General  Provisions.  53 

and  into  the  afTairs  of  any  corporation  organized  under  any 
law  of  this  state  or  having  an  office  in  this  state,  which  corporation 
is  engaged  in  or  is  claiming  or  advertising  that  it  is  engaged  in 
organizing  or  receiving  subscriptions  for  or  disposing  of  stock  of, 
or  in  any  manner  aiding  or  taking  part  in  the  formation  or  busi- 
ness of,  an  insurance  corporation  or  corporations,  or  which  is  hold- 
ing the  capital  stock  of  one  or  more  insurance  corporations  for  the 
purpose  of  controlling  the  management  thereof  as  voting  trustee  or 
otherwise.  For  such  purpose  he  may  appoint  as  examiners  one  or 
more  competent  persons  not  officers  of  or  connected  with  or  inter- 
ested in  any  insurance  corporation  other  than  as  policy  holders; 
and  upon  such  examination  he,  his  deputy  or  any  examiner  author- 
ized  by  him  may  examine  under  oath  the  officers  and  agents  oi 
such  corporation  and  all  persons  deemed  to  have  material  informa- 
tion regarding  the  company's  property  or  business.  Every  such 
corporation,  its  officers  and  agents,  shall  produce  its  books  and  all 
papers  in  its  or  their  possession  relating  to  its  business  or  affairs, 
and  any  other  person  may  be  required  to  produce  any  book  or 
paper  in  his  custody  deemed  to  be  relevant  to  the  examination,  for 
the  inspection  of  the  superintendent,  his  deputies  or  examiners 
whenever  required ;  and  the  officers  and  agents  of  such  corporation 
shall  facilitate  such  examination  and  aid  the  examiners  in  making 
the  same  so  far  as  it  is  in  their  power  to  do  so.  Every  such  exam- 
iner shall  make  a  full  and  true  report  of  every  examination  made 
by  him,  verified  by  his  oath,  which  shall  comprise  only  facts 
appearing  upon  the  books,  papers,  records  or  documents  of  such 
corporation,  or  ascertained  from  the  testimony,  sworn  to,  of  its 
officers  or  agents  or  other  persons  examined  under  oath  concerning 
its  affairs,  and  suchi  conclusions  and  recommendations  as  may 
reasonably  be  warranted  from  such  facts  so  disclosed,  and  said 
report  so  verified  shall  when  filed  be  presumptive  evidence  in  any 
action  or  proceeding  in  the  name  of  the  people  against  the  corpora- 
tion, its  officers  or  agents,  of  the  facts  stated  therein.  The  super- 
intendent shall  grant  a  hearing  to  the  corporation  examined  before 
filing  any  such  report;  and  may  withhold  any  such  report  from 
public  inspection  for  such  time  as  he  may  deem  proper  and  may, 
if  he  deems  it  for  the  interest  of  the  public  to  do  so,  publish  any 
such  report  or  the  result  of  any  such  examination  as  contained 
therein,  in  one  or  more  newspapers  of  the  state. 

Source. — Former  §  39,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1849,  cliap.  308,  §  23,  as  amended  by  L.  1866,  chap.  577;  L.  1851,  chap. 


54  The  Insurance  Law.  §§  40,41. 

95,  §  6;  L.  1853,  chap.  463,  §  17,  as  amended  by  L.  1866,  chap.  577;  L.  1851, 
chap.  95,  §  5;  L.  1853,  chap.  463,  §  17,  as  amended  by  L.  1879,  chap.  161;  L. 
1853,  chap.  466,  §  24;  L.  1869,  chap.  <)02,  §  15;  L.  1886,  ohap.  611,  §  15. 

Amended  by  L.  1910,  chap.  634,  and  L.  1913,  diap.  304. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  was  to  require  examinations  of  casualty  companies  at  least  once  in  three 
years  instead  of  once  in  five  years  as  formerly. 

See  §  843,  Code  Civ.  Proc.     Examiner  may  administer  oath. 

See  §  1197,  subd.  3,  Penal  Code.  Refusal  to  permit  superintendent  to  make 
examination  is  misdemeanor. 

See  §  665,  subd.  3,  Penal  Code.    False  statement  of  affairs  of  corporation. 

OATH. —  Under  the  provisions  of  §  39  of  the  Insurance  Law,  and  §  843 
of  the  Code  of  Civil  Procedure,  examiners  have  the  power  to  administer 
oaths  to  the  officers  and  agents  of  any  corporation  subject  to  examination. 
Attorney-General  Hep.,  1900,  page  259. 

FOREIGN  OFFICIALS.— Officials  of  foreign  states  have  no  legal  right  to 
examine  into  the  affairs  of  a  domestic  insurance  company.  Attorney- 
General  Rep.,  1894,  page  196. 

§  40.  Examination  by  superintendent  upon  request  of 
stockholder,  policyholder  or  creditor. 

The  superintendent  shall  make  an  examination  into  the  affairs 
of  any  insurance  corporation  doing  business  in  this  state,  whenever 
any  stockholder,  policyholder  or  judgment  creditor  of  any  such 
corporation  shall,  by  a  declaration  subscribed  and  sworn  to  by  him, 
notify  the  superintendent  of  facts  within  the  knowledge  of  the 
person  making  the  declaration,  and  stated  therein,  or  within  the 
knowledge  of  persons  whose  affidavits  stating  the  same  are  pre- 
sented therewith,  which  in  the  judgment  of  the  superintendent 
makes  such  an  examination  advisable. 

Source. — Former  §  40,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1873,  chap.  851,  §  2. 

INSOLVENT  COMPANY.—  The  Supreme  Court  has  power  to  entertain  pro- 
ceedings to  close  up  the  affairs  of  an  insolvent  life  insurance  company,  on 
the  petition  of  policyholders,  when  the  superintendent  of  the  insurance 
department  does  not  institute  proceedings.  Mooney  v.  British  Com.  Life 
Ins.  Co.,  9  Abb.  Pr.,  N.  S.,  103. 

§  41.    Impairment  of  capital. 

Whenever  it  appears  to  the  superintendent,  from  any  state- 
ment made  to  him  or  from  an  examination  made  by  him  or  by 
any  examiner  appointed  by  him,  that  the  capital  stock  of  any 
domestic  insurance  corporation,  except  a  life  insurance  corporation, 


§  41.  General  Provisions.  55 

is  impaired  to  the  extent  of  twenty-five  per  centum  thereof  or 
that  its  assets  are  insufficient  to  justify  its  continuance  in  business, 
he  shall  determine  tlie  amount  of  such  impairment  or  deficiency, 
and  issue  a  written  requisition  to  the  corporation  to  require  its 
stocldiolders  to  make  good  the  amount  of  the  impairment  or 
deficiency  within  such  period  as  he  may  designate,  not  less  than 
thirty  nor  more  than  ninety  days  from  the  service  of  the  requisi- 
tion. If  the  amount  of  any  such  impairment  or  deficiency  shall 
not  be  made  good  within  the  time  specified  in  such  requisition, 
and  proof  thereof  filed  with  the  superintendent  of  insurance,  the 
corporation  shall  be  deemed  insolvent  and  shall  be  proceeded 
against  as  an  insolvent  corporation,  by  the  attorney-general  in 
the  manner  authorized  by  law.  If  the  capital  stock  of  ajiy  foreign 
insurance  corporation,  except  a  life  insurance  corporation,  doing 
business  in  this  state  is  so  found  impaired  the  superintendent 
shall  revoke  the  certificate  of  authority  issued  to  such  corporation 
and  shall  cause  a  notice  thereof  to  be  published  in  the  state  paper 
for  four  weeks  and  such  corporation,  its  agent  or  agents,  shall 
discontinue  the  issuing  of  any  new  policies  within  this  state. 

Source. — Former  §  41,  as  amended  by  L.  1904,  chap.  451;  originally  revised 
from  L.  1849,  chap.  308,  §  13,  as  amended  by  L.  1864,  chap.  425,  and  §  23  as 
added  by  L.  1866,  chap.  577;  L.  1851,  chap.  95,  §  7;  L.  1853,  ohap.  463,  §  17,  as 
amended  by  L.  1879,  chap.  161;  L.  1853,  chap.  466,  §  24. 

See  §  12,  ante.    Minimum  capital  stock  of  marine  or  fire  stock  company. 

MUTUAL  INSURANCE  COMPANIES.— The  question  as  to  the  continu- 
ance in  business  of  a  mutual  insurance  company  is  to  be  determined  by  the 
superintendent  under  §  43  of  the  Insurance  Law,  and  §  41  of  that  act  does 
not  apply  to  such  companies.  People  ex  rel.  Long  Island  Mut.  v.  Payn,  26 
App.  Div.,  584;  50  N.  Y.  Supp.,  334. 

EXAMINERS. —  It  is  erroneous  for  the  official  examiners  of  the  insurance 
department  to  omit  to  credit  the  corporation  with  capital  stock  notes  when 
such  notes  are  in  the  possession  of  the  company,  unincumbered  at  the  time 
when  the  examination  is  made.  People  v.  Equitable  Mut.  Ins.  Co.,  1  App. 
Div.,  84;  aff'g  12  Misc.,  556. 

CAPITAL  STOCK. — ,The  capital  stock  of  fire  insurance  companies  of  other 
states  must  be  fully  paid  up  before  such  companies  can  be  authorized  to 
do  business  here.    Attorney- General  Rep.,  1893,  page  336. 

REQUISITION. —  The  superintendent  of  insurance  having  made  requi- 
sition upon  a  fire  insurance  company  to  make  good  an  impairment  of  its 
capital  cannot  withdraw  the  same.    Attorney-General  Rep.,  1897,  page  254. 

SPECIAL  RESERVE  FUND.— Special  reserve  fund  should  not  be  with- 
drawn where  the  surplus  fund  is  impaired.  In  re  Amer.  Fire  Insi,  Co., 
Attorney-General  Rep.,   1896,  page  237. 


56  The  Insurance  Law.  §  42. 

PUBLIC  POLICY.— Where  the  board  of  directors  of  an  insolvent  fire 
insurance  company  having  creditors  passes  a  resolution  to  reinsure  its  risks, 
liquidate  its  afl'airs,  or  sell  a  majority  of  its  stock,  and  thereafter  accepts 
a  proposition  from  another  company  to  buy  a  majority  of  the  stock  and 
liquidate  its  affairs,  the  agreement  is  void  as  against  public  policy  as  o 
scheme  to  annihilate  the  fire  insurance  company  without  dissolution  pro- 
ceedings as  required  by  this  section.     Gerrett  Co.  v.  Morton,  35  Misc.,  10. 

INSOLVENCY. —  An  insurance  company  cannot  be  said  to  be  insolvent,  or 
to  act  in  contemplation  of  insolvency,  merely  because  the  sums  insured 
greatly  exceed  its  capital;  nor  when  its  assets  are  more  than  sufficient  to 
meet  a.11  losses  of  which  the  company  has  any  notice,  information  or 
suspicion.    Holbropk  v.  Basset,  5  Bosw.,  147. 

It  is  enough  to  prevent  the  dissolution  of  the  company  if  the  assets  are 
sufficient  at  the  time  of  the  hearing  before  the  referee  though  insufficient 
at  the  time  when  the  application  for  dissolution  was  presented.  In  the 
Matter  of  World's  Safe  Ins.  Co.,  40  Barb.,  499. 

FRAUDULENT  TRANSFER.— Where  an  insurance  company,  being  insolv- 
ent, distributes  its  capital  among  its  stockholders,  thus  placing  the  fund 
beyond  the  reach  of  its  creditors,  the  fund  may  be  recovered  back  from  those 
who  received  it,  by  a  proper  action.  Osgood  v.  Laytin,  3  Abb.  Ct.  of  App.; 
3  Keyes,  521;  aff'g  48  Barb.,  463. 

§  42.    Stockholders  to  make  good  impairment  or  deficiency. 

Upon  the  receipt  of  the  requisition  of  the  superintendent  of 
insurance  specified  in  the  last  preceding  section,  the  directors  of 
the  corporation  shall  forthwith  call  upon  its  stocldiolders  ratably 
for  such  amounts  as  will  make  up  such  impairment  or  deficiency. 

If  any  stockholder  refuses  or  neglects  to  pay  the  amount  called 
for  after  notice,  personally  given  or  by  advertisement,  in  such  time 
and  manner  as  the  superintendent  shall  approve,  the  directors  may 
require  the  return  of  the  certificate  of  stock  held  by  the  stock- 
holder, and  in  lieu  thereof  issue  to  him  new  certificates  for  such 
number  of  shares  as  he  may  be  entitled  to  in  the  proportion  that 
the  ascertained  value  of  the  assets  of  the  corporation  as  determined 
by  the  superintendent  bears  to  its  original  capital,  the  corporation 
paying  for  any  fractional  parts  of  shares. 

The  directors  may  create  new  stock  and  issue  certificates  there- 
for and  dispose  of  the  same  at  not  less  than  par  for  an  amount 
sufficient  to  mal^e  up  the  original  capital  of  the  corporation. 

For  any  losses  accruing  upon  new  risks  taken  after  the  expira- 
tion of  the  period  limited  by  the  superintendent  in  any  such 
requisition  ard  before  such   impairment  or  deficiency  shall   be 


§  43.  General  Pkovisions.  57 

made  up,  the  directors  of  the  corporation  shall  be  jointly   and 
severally  individually  liable  to  the  extent  thereof. 

Any  transfer  of  stock  made  during  the  pendency  of  any  such 
examination  or  after  any  such  report  shall  have  been  made  and 
before  any  impairment  or  deficiency  specified  in  any  such  requisi- 
tion shall  be  made  good,  shall  not  release  the  person  making  the 
transfer  from  his  liability  for  losses  accrued  previous  to  such 
transfer. 

Source. — Former  §  42;  originally  revised  from  L.  1849,  chap.  308,  §  13,  as 
amended  by  L.  1864,  chap.  425,  and  §  23  as  added  by  L.  1866,  chap.  677;  L. 
1853,  chap.  466,  §  24. 

IMPAIRMENT  OF  CAPITAL. —  The  superintendent  of  insurance  having 
made  requisition  upon  a  fire  insurance  company  to  make  good  an  impairment 
of  its  capital,  cannot  withdraw  the  same.  Attorney-General  Rep.,  1897, 
page  254. 

§  43.    Impaired  mutual  insurance  corporations. 

If  it  appears  to  the  superintendent  from  an  examination  made 
by  him  or  by  an  examiner  appointed  by  him  that  the  assets  or  cap- 
ital of  any  mutual  insurance  corporation  are  insufficient  to  justify 
its  continuance  in  business,  he  shall  determine  the  amount  of  such 
deficiency  and  issue  a  written  requisition  to  the  officers  of  the 
corporation  requiring  them  to  make  it  good  within  a  time  to  be 
specified  therein,  not  less  than  thirty  nor  more  than  ninety  days 
from  the  service  of  such  requisition.  Such  service  may  be  made 
by  mail,  directed  to  the  corporation  at  its  place  of  business  in  this 
state  specified  in  its  charter.  Upon  the  service  of  such  requisition 
the  directors  of  the  corporation  shall  forthwith  cause  such 
deficiency  to  be  made  good,  and  proof  to  be  filed  with  the  superin- 
tendent within  the  time  specified  in  the  requisition  that  the  same 
has  been  made  good. 

For  any  losses  accruing  upon  new  risks  taken  after  the  expira- 
tion  of  such  time,  and  before  such  deficiency  shall  be  made  good, 
the  directors  of  the  corporation  shall  jointly  and  severally  be 
personally  liable  therefor.  If  such  deficiency  shall  not  be  made 
good  within  the  time  specified  in  such  requisition  and  satisfactory 
proof  thereof  filed  with  the  superintendent,  the  corporation  shall 
be  deemed  insolvent  and  may  be  proceeded  against  by  the  attorney- 


58  The  Insukance  Law.  §  44. 

general   as  an   insolvent  corporation   in  the   manner  autliorized 

by  law. 

Source.— Former  §  43;  originally  revised  from  L.  1849,  chap.  308,  §  13,  as 
amended  by  L.  1864,  chap.  425,  and  §  23,  as  added  by  L.  1806,  chap.  577;  L. 
1853,  chap.  466,  §  24. 

CONTINUANCE  OF  BUSINESS.— The  question  as  to  the  continuance  in 
business  of  a  mutual  insm*ance  company  is  to  be  determined  by  the  super- 
intendent under  this  section;  §  41  does  not  apply  at  all,  and  §  118  applies 
only  in  part  to  a  mutual  insurance  company.  People  ex  rel.  Long  Island 
Mut.  V.  Payn,  26  App.  Div.,  584;   50  N.  Y.  Supp.,  334. 

The  provisions  of  this  section  do  not  operate  as  a  limitation  upon  those 
provisions  of  the  Code  of  Civil  Procedure  defining  the  cases  in  which  the 
attorney -general  may  institute  an  action  of  this  character;  cases  might 
arise  where  the  delay  of  thirty  days  contemplated  by  §  43  might  work 
irreparable  injury  and  where  immediate  action  is  called  for.  People  v. 
Equitable  Mut.  Ins.  Co.,  1  App.  Div.,  85. 

§  44.    Reports  of  corporations. 

Every  corporation,  engaged  wholly  or  in  part  in  the  transaction 
of  the  business  of  insurance  in  this  state,  whether  heretofore  or 
hereafter  incorporated  by  a  general  or  special  law,  shall  annually, 
on  the  first  day  of  January,  or  within  two  months  thereafter,  if  a 
corporation  under  article  two  of  this  chapter,  and  on  or  before  the 
fifteenth  day  of  February,  if  a  corporation  under  the  other  articles 
of  this  chapter,  file  in  the  office  of  the  superintendent  of  insurance 
a  statement  verified  by  the  oath  of  at  least  two  of  the  principal 
officers  of  such  corporation,  showing  its  condition  on  the  thirty- 
first  day  of  December  then  next  preceding  which  shall  be  in  such 
form  and  shall  contain  such  matters  as  the  superintendent  shall 
prescribe.  If  a  foreign  corporation  incorporated  under  the  laws 
of  a  state  or  country  outside  of  the  United  Stated  such  oath  may  be 
made  by  the  manager  thereof  within  the  United  States. 

The  superintendent  may  also  address  any  inquiries  to  any  such 
insurance  corporation  or  its  officers  in  relation  to  its  doings  or 
condition,  or  any  other  matter  connected  with  its  transactions. 
Every  corporation  so  addressed  shall  promptly  and  tnithfully  reply 
in  writing  to  any  such  inquiries,  and  such  reply  shall  be  verified, 
if  required  by  the  superintendent,  by  such  officer  of  the  corporation 
as  he  shall  designate. 

Source. — Former  §  44,  as  amended  by  L.  1897,  chap.  493;  originally  revised 
from  L.  1849,  chap.  308,  §  7,  and  §  13,  as  amended  hy  L.  1864,  chap.  425;  L. 
1851,  ch^p.  95,  §  4;  L.  1853,  chap.  463,  §  12  and  §§14  and  15,  as  amended  by 


§  45.  General  Provisions.  59 

L.  1862,  chap.  300;  L.  1853,  chap.  406,  §  22,  as  amended  by  L.  1854,  chap.  309; 
L.  1801,  chap.  320,  §  2;  L.  1801,  chap.  334,  §  1;  L.  1865,  chap.  199,  §  2,  as 
amended  by  [L.  1867,  chap.  709;  L.  1865,  chap.  328,  §  3;  L.  1806,  chap.  843; 
L.  1869,  chap.  902,  §  14;  L.  1885,  chap.  538,  §  18;  L.  1886,  chap.  Oil,  §  10. 

Amended  by  L.  1910,  chap.  634. 

See  §  665,  Penal  Law.    Misconduct  of  officers  and  employes. 

See  §§  1194,  1195,  1197,  Penal  Law.  Misconduct  of  agents  in  certain  insur 
ance  companies. 

FOREIGN  CORPORATION.— Within  the  meaning  of  the  insurance  law  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another  state 
of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-Ceneral  Rep.,  1895, 
page  56. 

Section  20  of  the  Banking  Law  which  requires  that  reports  of  certain 
corporations  sihall  contain  a  statement  of  conditions  on  a  .particular  day,  does 
not  contemplate  that  the  market  price  of  stocks  established  on  that  particular 
day  shall  be  the  value  to  determine  the  condition  of  the  corporation  on  that 
day,  but  that  the  value  of  the  stock  investments  shall  be  the  estimated 
market  value.     Attorney-General  Rep.,  July   19,  1907. 

The  requirement  of  thie  charter  of  a  company,  incorporated  before  the 
passage  of  first  general  insurance  law  in  1849,  as  to  a  general  balance  state- 
ment, is  not  in  conflict  with  sections  44  and  45  of  the  Insurance  Law,  impos- 
ing the  duty  of  filing  reports  with  the  Superintendent  of  Insurance.  Attor- 
ney-General Rep.,  March  21,  1912. 

VERIFICATION.— It  is  not  necessary  that  the  oath  of  the  officers  of 
insurance  companies  should  precede  the  preparation  of  their  annual  state- 
ment, but  after  it  has  been  prepared  it  should  be  verified  with  their  oaths. 
Case  v.  People,  6  Abb.  N.  C,  151. 

FALSE  STATEMENT.— An  action  does  not  lie  by  a  stockholder  of  a 
mutual  insurance  company  to  declare  the  franchise  forfeited,  and  enjoin  its 
exercise,  and  have  a  receiver  appointed,  on  the  ground  that  the  defendants 
made  a  false  annual  statement.  Fisher  v.  World  Mut.  Life  Ins.  Co.,  15 
Abb.  Pr.,  N.  S.,  363. 

.  §  45.    Forms  of  report  to  be  furnished  by  superintendent. 

The  superintendent  shall  cause  to  be  prepared  and  furnished  to 
every  corporation  required  by  the  provisions  of  this  chapter  to 
report  to  him,  printed  forms  of  the  reports  and  statements  required 
of  such  corporations.  He  may  make  such  changes  from  time  to 
time  in  the  form  of  the  same  as  shall  seem  to  him  best  adapted  to 
elicit  from  such  corporations  a  true  exhibit  of  their  condition  in 
respect  to  the  several  matters  which  they  are  required  to  report, 
or  in  respect  to  any  other  matters  which  he  may  deem  material. 
The  report  of  any  corporation,  the  capital  of  whidi  is  composed 
'M  whole  or  in  part  of  notes,  shall,  in  addition  to  the  foregoing, 
exhibit  the  amount  of  notes  originally  forming  its  capital,  and  also 


60  The  Insurance  Law.  §  45. 

what  proportion  of  such  notes  is  still  held  by  the  corporation  and 
considered  capital. 

If  a  corporation,  incorporated  under  the  laws  of  any  state  or 
country  outside  of  the  United  States,  such  report  with  respect  to 
the  business  done  and  assets  held  by  or  for  the  corporation,  shall 
only  contain  a  statement  of  the  business  done  and  assets  held  by 
or  for  it  within  the  United  States  for  the  protection  of  all  policy 
holders  residing  within  the  United  States,  and  shall  not  contain 
any  statement  in  regard  to  its  assets  and  business  elsewhere.  In 
addition  to  any  other  penalty  prescribed  by  law,  every  insurance 
corporation  failing  to  make  and  file  the  reports  and  statements 
required  by  this  chapter  or  to  reply  to  any  inquiry  of  the  super- 
intendent, shall  forfeit  to  the  people  of  the  state  ^ve  hundred 
dollars  for  the  first  offense,  and  an  additional  five  hundred  dollars 
for  every  montli  that  such  corporation  shall  thereafter  continue 
to  transact  any  business  of  insurance  in  this  state. 

Source.— Former  §  46,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1849,  chap.  308,  §  13,  as  amended  by  L.  1864,  chap.  425;  L.  1853,  chap. 
463,  §  12;  L.  1853,  chap.  466,  §  22,  as  amended  by  L.  1854,  chap.  369;  L.  1861, 
chap.  334,  §  2;  L.  1880,  chap.  110,  §  2;  L.  1882,  chap.  235,  §  1;  L.  1885,  chap. 
538,  §  18;  L.  1886,  chap.  611,  §  16. 

See  §  665,  Penal  Law.  Refusal  or  neglect  of  officer  of  corporation  to  make 
any  report  is  a  misdemeanor. 

FOREIGN  OORPORATION.—  Within  the  meaning  of  the  Insurance  Law,  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another  state 
of  the  United  States.  In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep.,  1895, 
page  56. 

Where  certain  foreign  ocean  marine  insurance  companies  doing  business 
within  this  state  collect  the  premiums  within  the  state  though  losses  upon 
which  the  certificates  are  made  are  payable  abroad,  the  annual  report  of  such 
companies  should  contain  a  statement  of  its  losses  paid  abroad  when  such 
losses  are  upon  policies  written  in  this  state.  Attorney-General  Rep., 
Feb.  20,  1911. 

The  requirement  of  the  charter  of  a  company,  incorporated  before  the 
passage  of  first  general  insurance  law  in  1849,  as  to  a  general  balance  state- 
ment, is  not  in  confiict  with  sections  44  and  45  of  the  Insurance  Law,  impos- 
ing the  duty  of  filing  reports  with  the  Superintendent  of  Insurance.  Attor- 
ney-General Rep.,  March  21,  1912. 

A  foreign  reinsurance  corporation  authorized  to  do  a  fire  reinsurance  busi- 
ness in  this  State,  must  report  to  the  New  York  Superintendent  of  Insurance 
all  business  done  in  the  United  States  with  direct  writing  companies  therein, 
regardless  of  the  facts  that  the  business  is  done  through  foreign  offices,  and 
not  through  the  United  States  branch  of  the  company,  or  that  the  property 
insured  is  located  in  Canada,  Mexico  or  Cuba;  and  such  foreign  corporation 
must  maintain  in  the  United  States  the  proper  unearned  premium  and  unpaid 
loss  reserves  thereon.     Attorney-General  Op.,  June  22,  1915. 


§§  46,  47.  General  Provisions.  61 

§  46.    Annual  report  of  superintendent. 

The  superintendent  of  insurance  shall  annually  transmit  to  the 
legislature  at  the  opening  of  its  session,  or  within  ninety  days 
thereafter,  a  report  containing  the  statements  and  reports  made 
to  him  pursuant  to  tlie  provisions  of  section  forty-four  of  this 
chapter,  as  such  statements  and  reports  shall  be  audited  and  cor- 
rected by  him,  all  arranged  in  tabular  form,  or  in  abstracts,  in 
classes  according  to  the  kind  of  insurance  made  by  the  corporation, 
which  report  shall  also  contain : 

1.  A  statement  of  all  insurance  corporations  authorized  to  do 
business  in  this  state  during  the  year  ending  the  thirty-first  day 
of  December  next  preceding,  with  their  names,  locations,  amounts 
of  capital,  dates  of  incorporation,  and  of  the  commencement  of 
business,  and  kinds  of  insurance  in  which  tliey  are  engaged 
respectively. 

2.  A  statement  of  the  insurance  corporations  w^hose  business 
has  been  closed  during  such  year  and  the  reasons  for  closing  the 
same,  with  the  amount  of  tlieir  assets  and  liabilities  so  far  as  tlie 
same  are  known,  or  can  be  ascertained  by  him. 

3.  Any  amendments  to  this  chapter  which  in  his  judgment 
may  be  desirable. 

4.  The  names  and  compensation  of  the  clerks  employed  by  him, 
and  the  whole  amount  of  the  expenses  of  the  department. 

In  addition  to  the  usual  number  of  copies  for  the  nse  of  the 
legislature,  there  shall  be  printed  and  in  readiness  for  disiribntion 
by  the  printer  employed  to  print  legislative  documents,  two  thou- 
sand copies  of  such  report  for  the  use  of  the  department. 

Source. — Former  §  46;  originally  revised  from  L.  1849,  chap.  308,  §  13,  as 
amended  by  L.  1864,  chap.  425;  L.  1853,  chap.  463,  §  13,  as  amended  by  L.  1873, 
chap.  849;  L.  1853,  chap.  466,  §  22,  as  amended  by  L.  1854,  chap.  369;  L.  1859, 
chap.  366,  §  3,  as  amended  by  L.  1866,  chap.  514;  L.  1885,  chap.  538,  §  18;  J.. 
1886,  chap.  611,  §  16. 

Amended  by  L.  1909,  chap.  301;  L.  1910,  chap.  634,  and  L.  1912,  chap.  89. 

§  47.    Deceptive  statements  prohibited. 

No  insurance  corporation  doing  business  in  this  state,  or  agent 
thereof,  shall  state  or  represent  by  advertisement  in  any  newspaper, 
periodical  or  magazine,  or  by  any  sign,  circular,  card,  policy  of 


62  The  Insurance  Law.  §  48. 

insurance  or  certificate  of  renewal  thereof  or  otherwise,  that  any 
funds  or  assets  ar<^  in  nossession  of  any  sucli  corporation  not 
actually  possessed  by  it  and  available  for  the  payment  of  losses 
and  claims,  and  held  for  the  protection  of  its  policy  holders  or 
creditors. 

Source. — Former  §  47;  originally  revised  from  L.  1877,  (^hap.  241,  §  1. 

See  §  665,  Penal  Law.  Misconduct  of  officers  and  employees  of  corporations 
as  to  making  reports. 

See  §§  1194,  1195,  1197,  Penal  Law.  Misconduct  of  agents  in  certain  insur- 
ance companies. 

See  §  1203,  Penal  LaAv.     Issue  and  circulation  of  false  literature. 

§  48.    Contents  of  advertisements. 

Every  advertisement  or  public  announcement,  and  every  sign, 
circular  or  card  issued  by  any  insurance  corporation  or  association 
incorporated  by  or  existing  under  the  laws  of  this  state  or  of  any 
other  state  of  the  United  States  and  doing  business  in  this  state 
purporting  to  make  known  its  financial  standing,  shall  exhibit  the 
amount  of  the  capital  actually  paid  in  in  cash,  the  assets  owned, 
the  liabilities,  including  therein  the  premium  and  loss  reserves  re- 
quired by  law,  and  the  amount  of  net  surplus  of  assets  over  all  its 
liabilities  actually  available  for  the  payment  of  its  losses  and 
claims,  and  held  for  the  protection  of  its  policy  holders,  and  shall 
correspond  with  the  verified  statement  made  by  it  to  the  insurance 
department  next  preceding  the  making  or  issuing  of  the  same. 
Every  advertisement  or  public  announcement,  and  every  sign, 
circular  or  card  issued  by  any  insurance  corporation  or  association 
incorporated  by  or  existing  under  the  government  or  laws  of  a 
country  outside  of  the  United  States  and  doing  business  in  this 
state,  purporting  to  make  known  its  financial  standing,  shall 
exhibit  as  capital  and  as  assets  only  the  capital  and  asset-s  held  by 
its  United  States  branch,  the  liabilities,  including  therein  the 
premium  and  loss  reserves  required  by  law,  and  the  amount  of  net 
surplus  of  assets  over  all  its  liabilities  actually  available  for  the 
payment  of  its  losses  and  claims  and  held  for  the  protection  of  its 
policyholders  in  the  United  States,  and  shall  correspond  with  the 
verified  statement  made  by  it  to  the  insurance  department  next 
preceding  the  making  or  issuing  of  the  same. 


§  49.  General  Provisions.  63 

For  every  violation  of  this  and  the  preceding  section  by  any 
such  corporation,  it  shall  forfeit  for  the  first  offense  to  the  people 
of  the  st>ate  tlie  sum  of  five  hundred  dollars,  and  for  every  subse- 
quent offense  the  sum  of  one  thousand  dollars,  which  sums,  when 
recovered,  shall  be  paid  into  the  treasury  of  the  state.  This  sec- 
tion shall  not  apply  to  any  life  insurance  corporation  nor  to  any 
domestic  or  foreign  insurance  corporation  or  association  engaged 
solely  in  the  business  of  marine  or  transportation  insurance  or  in 
such  business  in  connection  with  the  business  of  automobile 
insurance. 

Source. — Former  §  48;  originally  revised  from  L.  1877,  chap.  241,  §§  2-4. 

Amended  by  L.  1913,  chap.  205. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  205  of 
1913  was  to  compel  foreign  fire  or  casualty  companies  in  every  advertisement 
or  public  announcement  to  give  a  statement  of  the  capital  and  assets  held  by 
the  United  States  branch. — Ed. 

See  §  665,  Penal  Law.  Misconduct  of  officers  and  employees  of  corpora- 
tions as  to  making  or  publishing  false  statement. 

ADVERTISEMENT. —  Every  advertisement  made  by  an  insurance  company 
as  to  the  amount  of  its  resources  must  state  the  amount  of  its  capital  paid 
up  in  cash.    Attorney-General  Rep.,  1892,  page  269. 

§  49.    Agents. 

Every  agent  of  any  insurance  corporation  doing  business  in 
this  state  shall,  in  all  advertisements  of  such  agency,  publish  the 
location  of  the  corporation,  giving  the  name  of  the  city,  town  or 
village  in  which  it  has  its  principal  business  office,  and  the  state 
or  government  under  the  laws  of  which  it  is  organized. 

The  term,  "  agent,"  in  this  chapter  shall  include  an  acknowl- 
edged agent  or  surveyor  or  any  other  person  who  shall  in  any 
manner  aid  in  transacting  the  insurance  business  of  any  insurance 
corporation  not  incorporated  by  the  laws  of  this  state,  and  any 
broker  whose  business,  in  whole  or  in  part,  is  to  negotiate  for  and 
place  risks,  deliver  the  policies  covering  the  same  and  collect 
premiums  therefor. 

Source. — Former  §  49;  originally  revised  from  iL.  1849,  ohap.  308,  §  7;  L. 
1853,  chap.  466,  §  23,  as  amended  by  L.  1875,  chap.  555. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate  of  authorization  by  superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  in  office 
of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  filed  in 
county  clerk's  office. 


64  The  Insurance  Law.  §  49. 

See  §  32,  ante.     Renewal  of  certificate. 

See  §  50,  post.    Agent's  certificate  of  authority. 

See  §  53,  post.    Penalty  for  violation  of  Insurance  Law. 

See  §  54,  post.     Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.    Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

The  general  superintendent  of  agencies  of  an  insurance  company  assisting 
an  agent  in  closing  difficult  cases  is  within  the  meaning  of  "  agent "  in  §  49. 
Ruling  Ins.  Dept.,  Dee.  23,   1910. 

REVOCATION. —  Where  an  insurance  company,  at  the  time  of  the  revoca- 
tion of  an  existing  agency,  gave  no  public  notice  of  the  same,  and  left  with 
the  former  agent  policies  in  blank,  signed  by  the  company,  such  revocation 
is  not  effective  as  against  a  person  subsequently  insured  in  such  company 
by  such  agent,  in  the  absence  of  any  proof  that  such  revocation  of  authority 
was  known  to  him  at  the  time  of  the  issuance  to  him  of  the  policy.  Mar- 
shall V.  Reading  Fire  Ins.  Co.,  78  Hun,  83. 

DEFINITION. —  The  definition  of  an  agent  as  contained  in  this  section 
will  not  be  imported  into  chap.  641  of  1892  in  order  to  bring  agents  of  the 
insured  within  the  penalty  of  that  statute  and  defeat  a  recovery  by  them 
on  the  agreement.     Romberg  v.  Kouther,  27  Misc.,  227. 

ENTIRE  MANAGEMENT.— There  is  no  warrant  in  law  for  the  making 
of  a  contract  which  substantially  places  the  entire  management  of  the  busi- 
ness of  the  company  in  the  hands  of  a  general  agent.  Attorney-General  Rep., 
1897,  page  114. 

There  is  no  provision  in  the  insurance  laAv  which  warrants  the  transfer 
of  corporate  rights  and  franchises  to  an  individual  acting  as  general  agent 
in  another  state.     Attorney-General  Rep.,  1896,  page  276. 

LIMITATION  OF  AUTHORITY.— The  powers  possessed  by  agents  of 
insurance  companies  are  to  be  interpreted  in  accordance  with  the  general 
law  of  agency.  Where  restrictions  upon  the  agent's  authority  appear  in  a 
policy  the  insured  is  bound  to  take  notice  of  them,  and  in  the  absence  of 
evidence  tending  to  show  that  his  powers  have  been  enlarged  by  the  usage 
of  the  company,  its  course  of  business  or  by  consent,  express  or  implied, 
the  policy  must  control,  and  the  authority,  as  limited,  must  be  regarded 
as  the  measure  of  the  agent's  power.    Quinlan  v.  P.  W.  Ins.  Co.,  133  N.  Y.,  356. 

In  determining  the  authority  of  agents,  their  instructions  are  not  neces- 
sarily controlling,  and,  although  an  agent  be  instructed  to  do  one  thing  or 
to  exercise  only  a  limited  authority,  if  he  is  knowingly  habitually  suffered 
to  exercise  a  greater  authority,  the  principal  is  bound  by  the  authority  ho 
has  allowed  his  agent  to  exercise,  notwithstanding  his  instructions  to  the 
contrary.    Powers  v.  Prudential  Ins.  Co.,  83  Hun,  254;  aff'd  145  N.  Y.,  654. 

Where  the  power  of  an  agent  is  apparently  limited,  a  person  dealing  with 
him  is  bound  to  inquire  concerning  the  extent  of  his  authority  before  acting 
upon  the  faith  of  its  existence;  and  a  principal  who  has  not  clothed  an 
agent  with  either  real  or  seeming  authority  is  not  bound  by  the  simple 
declaration  of  such  agent  that  the  principal  is  bound  by  his  acts  or  state- 
ments.   Allen  v.  St.  Lawrence  F.  Ins.  Co.,  88  Kun,  461. 

Authority  to  an  agent  to  solicit  applications  for  life  insurance  does  not 
give  him  authority  to  collect  premiums.  Howell  v.  Charter  Oak  Ins.  Co., 
2  Wk.   Dig.,  383. 


§  50.  General  Provisions.  65 

An  agent  authorized  to  represent  one  company  may  not,  in  case  his  company 
take^i  part  of  a  iproposed  risk,  place  the  remaining  portion  of  the  risk  with 
another  company  through  that  other  company's  agent.  Attorney-General 
Rep.,  Feb.  8,  1908. 

AGENT'S  CONTRACT. —  When  a  contract  between  an  agent  and  insur- 
ance company  is  entered  into  without  any  fraud  or  misrepresentation  on 
the  part  of  the  company,  the  agent  is  bound  by  its  terms,  even  though  it  be 
a  hardship.    Levitt  v.  Prudential  Ins.  Co.,  39  St.  Rep.,  91. 

Where  the  contract  of  employment  of  a  life  insurance  agent  requires  him 
to  devote  his  entire  time  and  energies  for  a  term  of  years  in  procuring  applica- 
tions for  insurance  in  the  company  so  employing  him  and  to  act  exclusively  for 
such  company,  and  his  compensation  depends  upon  the  premiums  on  policies 
issued  through  his  instrumentality,  he  is  entitled  to  have  applications  offered 
by  him  treated  in  good  faith,  and  cannot  be  deprived  of  his  compensation  by 
An  arbitrary  rejection  of  a  claim  procured  by  him.  Madden  v.  Equitable  Life 
Assur.  Soc,  11  Misc.,  540. 

FIRM. —  Where  a  firm  is  appointed  to  an  agency,  such  agency  ceases  upon 
the  death  of  one  of  the  members  of  the  firm,  and  the  principal  is  not  bound 
by  the  subsequent  acts  of  the  surviving  member.  Martine  v.  International 
L.  Ins.  Soc,  63  N.  Y.,  339. 

CLERKS. —  An  ordinary  agent  of  an  insurance  company  has  power  to  hire 
AS  many  clerks  as  may  be  necessary  to  do  the  business  of  the  agency, 
and  a  provision  in  an  insurance  policy  that  no  one  not  holding  a  commission 
ahall  be  considered  as  its  agent,  does  not  prevent  the  employment  by  a  com- 
missioned agent  of  the  usual  and  necessary  clerical  and  other  assistants  to 
enable  him  to  properly  perform  his  duties.  Arff  v.  Star  Ins.  Co.,  125 
N.  v.,  57. 

§  50.    Agent's  certificate  of  authority. 

!N"o  person  or  corporation  shall  act  as  agent  for  any  foreign 
insurance  corporation  in  the  transaction  of  any  hnsiness  of  insur- 
ance within  this  state,  or  negotiate  for  or  place  risks  for  any  such 
corporation,  or  in  any  way  or  manner  aid  such  corporation  in 
effecting  insurances  or  otherwise  in  this  state,  unless  such  corpo- 
ration shall  have  fully  complied  with  the  provisions  of  this  chapter. 
Every  such  agent  shall,  annually,  on  the  first  day  of  January,  or 
within  six  months  thereafter,  procure  a  certificate  of  authority 
from  the  superintendent  of  insurance,  who  shall  file  in  his  office 
evidence  of  the  issuance  of  such  certificate  to  the  agent  aforesaid. 
Any  person  or  corporation  violating  the  provisions  of  this  sectior 
shall  forfeit  to  the  people  of  the  state  the  sum  of  ^ve  hundred 
dollars  for  the  first  offense,  and  an  additional  sum  of  one  hun- 
dred dollars  for  each  month  during  which  any  such  person  or 
corporation  shall  continue  to  act  in  violation  of  this  section.     This 


66  The  Insurance  Law.  §  50. 

section  shall  not  apply  to  the  agents  of  corporations  transacting 
business  under  the  provisions  of  article  six  of  this  chapter. 

Source. — Former  §  50,  as  amended,  by  L.  1893,  chap,  725;  originally  revised 
from  L.  1853,  chap.  466,  §  23,  as  amended  by  L.  1875,  chap.  555. 

Amended  by  L.  1909,  chap.  301. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate  of  authorization  by  superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  tiled  in  office 
of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  tiled 
in  county  clerk's  office. 

See  §  32,  ante.    Renewal  of  certificate. 

See  §  49,  ante.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  53,  post.     Penalty  for  violation  of  Insurance  Law. 

See  §  54,  post.    Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.    Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

See  §  1192,  Penal  Law.    Overcharges  by  marine  insurance  agents. 

See  §  1197,  Penal  Law.  Acts  as  agent  of  foreign  corporation  which  failed 
to  obtain  certificate  to  do  business  in  this  state. 

See  §§  1198,  1199,  Penal  Law.    Misconduct  of  agents. 

FOREIGN  CORPORATION.— Within  the  meaning  of  the  insurance  law,  a 
foreign  corporation  includes  one  incorporated  under  the  laws  of  another  state  • 
of  the  United  States.     In  re  Penn.  Fire  Ins.  Co.,  Attorney-General  Rep.,  1895, 
page  66. 

AGENTS. —  Corporations  may  act  as  agent  for  insurance  companies  when 
expressly  authorized  so  to  do  by  their  charters,  and  not  otherwise.  In  re 
Carpenter  &  Co.,  Attorney -General  Rep.,  1893,  page  369. 

The  superintendent  of  agencies  of  a  foreign  corporation  coming  into  the 
state  and  assisting  and  co-operating  with  agents  in  closing  difficult  cases 
should  have  an  agent's  license.    Ruling  Ins.  Dept.,  Dec.  23,  1909. 

An  unauthorized  corporation  cannot  act  as  agent  for  procuring  insurance 
within  this  state.     July  22,  1897. 

A  domestic  corporation  organized  to  conduct  a  general  insurance  agency 
may  l>e  licensed  to  act  as  such  agent.    Nov.  16,  1893. 

A  general  agent  in  this  State  signing  policies  issued!  by  a  foreign  company 
comes  within  the  penalty  of  the  section,    Attorney-General  Rep.,  June  2,  1904. 

A  foreign  life  com,i>any  not  authorized  to  do  business  in  this  State  cannot 
establish  an  agency  in  this  State  solely  to  collect  premiums.  Attorney-General 
Rep.,  Sept.  19,  1907. 

Where  the  Penal  Codle  has  Ibeen  violated,  both  by  a  foreign  company  and  its 
agent,  the  matter  should  be  referre<l  to  the  District  Attorney.  Attorney- 
General  Rep.,  April  2,  1907. 

DEMURRER. —  A  complaint  in  an  action  brought  to  recover  for  services 
rendered  in  placing  insurance  for  the  defendant,  a  foreign  insurance  corpora- 
tion, in  the  state  of  New  York,  is  not  demurrable  because  it  fails  to  allege 
affirmatively  that  the  defendant  has  complied  with  the  provisions  of  the 
Insurance  Law,  and  that  consequently  the  agreement  of  the  plaintiff  to  act  as 


§§  51, 52.  General  Provisions.  67 

its  agent  was  not  unlawful  under  this  section.  Crichton  v.  Columbia  Ins. 
Co.,  81   App.  Div.,  614. 

ADJUSTMENT. —  An  agent  of  a  foreign  insurance  company  can  adjust  a 
loss  without  procuring  a  certificate.  People  ex  rel.  McCall  v.  Gilbert,  44 
Hun,  522. 

POLICY  VALID. —  The  failure  of  a  foreign  insurance  corporation  to  do 
the  acts  required  by  this  section  does  not  avoid  a  policy  issued  by  it.  Mar- 
shall V.  Reading  Fire  Ins.  Co.,  78  Hun,  83;  aff'd  149  N.  Y.,  617. 

§  51.  Examination  of  securities  deposited  by  officers  of 
corporation. 

Every  insurance  corporation  having  securities  deposited  in  the 
otfice  of  the  superintendent  of  insurance,  shall,  once  or  more 
during  each  calendar  year,  and  at  such  time  or  times  during  the 
ordinary  business  hours  as  the  corporation  may  select,  cause  such 
securities  to  be  examined  by  its  president,  secretary,  actuary,  or 
other  officer  or  agent  whom  it  may  designate  for  that  purpose, 
to  be  compared  with  the  books  of  tlie  insurance  department,  and 
if  found  correct,  to  execute  to  the  superintendent  of  insurance  a 
receipt  or  certificate  setting  forth  in  the  same  the  different  kinds 
of  such  securities  and  the  amounts  thereof,  and  tliat  the  same  are 
in  the  possession  and  custody  of  the  superintendent  at  tlie  date  of 
such  receipt. 
Source. — Former  §  51;  originally  revised  from  L.  1869,  chap.  902,  §  16. 

§  62.  Reorganization  of  existing  corporations  and  amend- 
ment of  certificates. 

Any  domestic  corporation  existing  or  doing  business  on  October 
first,  eighteen  hundred  and  ninety-two,  may,  by  a  vote  of  a  ma- 
jority of  its  directors  or  trustees  accept  the  provisions  of  this  chap- 
ter and  amend  its  charter  to  conform  with  the  same,  upon  obtaining 
the  consent  of  the  superintendent  of  insurance  thereto  in  writing ; 
and  thereafter  it  shall  be  deemed  to  have  been  incorporated  under 
this  chapter,  and  every  such  corporation  in  reincorporating  under 
this  provision  may  for  that  purpose  so  adopt  in  whole  or  in  part  a 
new  charter,  in  conformity  herewith,  and  include  therein  any  or  all 
provisions  of  its  existing  charter,  and  any  or  all  changes  from  its 
existing  charter,  to  cover  and  enjoy  any  or  all  the  privileges  and 
provisions  of  existing  laws  which  might  be  so  included  and 
enjoyed  if  it  were  originally  incorporated  thereunder,  and  it  shall, 
upon  such  adoption  of  and  after  obtaining  the  consent,  as  in  this 
section  before  provided,  to  such  charter,  and  filing  the  same  and 


68  The  Insurance  Law.  §  52. 

tlie  record  of  adoption  and  consent  in  tlie  office  of  the  superin- 
tendent of  insurance,  perpetually  enjoy  the  same  as  and  be  such 
corporation,    which   is   declared   to   be   a    continuation    of   such 
corporation  which  existed  prior  to  such  reincorporation ;  and  the 
offices  therein  which  shall  be  continued  shall  be  filled  by  the 
respective  incumbents  for  the  periods  for  which  they  were  elected, 
and  all  others  shall  be  filled  in  the  same  manner  by  such  amended 
charter   provided.     Every   domestic   insurance   corporation   may 
amend   its   charter   or   certificate   of   incorporation   by    inserting 
therein  any  statement  or  matter  which  might  have  been  originally 
inserted  therein;  and  may  also  eliminate  therefrom  unnecessary 
words  or  verbiage,  or  any  powers  which  have  never  been  exercised 
or  are  not  at  the  time  being  exercised,  provided  that  proof  of  the 
non-exercise  of  powers,  satisfactory  to  the  superintendent  of  insur- 
ance, shall  be  filed  in  the  insurance  department,  and,  if  any  busi- 
ness has  been  written  under  the  powers  proposed  to  be  eliminated, 
the  fact  that  all  liability  incident  to  such  powers  has  been  fully 
terminated  shall  be  shown  to  the  satisfaction  of  such  superin- 
tendent through  an  examination  of  such  corporation  or  otherwise 
as  he  may  require;  and  may  likewise  amend  its  charter  or  certifi- 
cate of  incorporation,  by  inserting  therein  or  adding  thereto  any 
powers  which,  at  the  time  of  such  amendment,  may  have  been  con- 
ferred by  law  upon  domestic  insurance  corporations  engaged  in  a 
business  of  the  same  general  character,  or  which  might  be  in- 
cluded in  the  certificate  of  incorporation  of  a  domestic  insurance 
company  organized  under  any  general  law  of  this  state  for  a  busi- 
ness of  the  same  general  character;  and  the  same  proceedings 
shall  be  taken  upon  the  presentation  of  such  amended  charter  or 
certificate  or  amendment  to  such  charter  or  certificate,  to  the  super- 
intendent of  insurance,  as  are  required  by  this  chapter  to  be  taken 
with  respect  to  an  original  charter  or  certificate,  except  that  no 
examination  of  the  condition  and  affairs  of  such  corporation  shall 
be  required  unless   so  ordered   by   the   superintendent,    and   if 
the  amended  charter  or  certificate  or  amendment  be  approved  by 
the  superintendent  of  insurance,  and  his  certificate  of  authority  to 
do  business  thereunder  is  granted,  the  corporation  shall  there- 
after be  deemed  to  possess  the  same  powers  and  be  subject  to  the 
same  liabilities  as  if  such  charter  or  certificate  as  so  amended  had 
been  its  original  charter  or  certificate  of  incorporation,  but  without 
prejudice   to   any    pending   action   or   proceeding   or   any   rights 
previously    accrued.      Upon    the    reincorporation    or    upon    tho 
amendment  of  the  charter  of  any  life  insurance  corporation,  hav- 


§  52.  General  Provisions.  69 

ing  a  capital  stock,  in  accordance  with  the  provisions  of  this 
section,  it  may  by  a  vote  of  a  majority  of  its  directors  confer 
upon  its  policy  holders  or  upon  such  policy  holders  as  may  have 
a  prescribed  amount  of  insurance  upon  their  lives  the  right  to  vote 
for  all  or  any  less  number  of  the  directors  in  such  maimer  not 
inconsistent  with  any  provision  of  this  chapter  as  may  be  author- 
ized by  a  vote  of  the  stockholders  representing  at  least  a  majority 
of  the  capital  stock  at  a  meeting  of  stockholders  called  for  the 
purpose.  Section  eighteen  of  the  stock  corporation  law  shall 
not  apply  to  such  a  corporation.  This  section  shall  apply  to 
insurance  corporations  organized  under  or  subject  to  article  six 
of  this  chapter  as  well  as  to  insurance  corporations  organized 
under  a  special  act  or  any  general  law  or  article  two  of  this  chapter. 
In  the  case  of  any  corporation  organized  under  or  subject  to 
article  six  of  this  chapter,  which  corporation  has  amended  its 
charter  and  is  now  operating  under  article  two  of  this  chapter, 
all  contracts,  policies  and  certificates  issued  prior  to  its  reincorpo- 
ration, shall  be  valued  as  one  year  term  insurance  at  the  ages 
attained  excepting  when  such  contracts,  policies  or  certificates  shall 
provide  for  a  limited  number  of  specified  premiums  or  for  specified 
surrender  values,  in  which  case  they  shall  be  valued  as  provided 
in  article  two,  section  eighty-four  of  this  chapter. 

But  no  life  insurance  corporation  shall  hereafter  be  permitted 
to  avail  itself  of  the  provisions  of  this  section  unless  it  shall  hold 
for  all  its  outstanding  policies  or  certificates  assets  equal  in  value 
to  the  minimum  reserve  required  by  section  eighty-four  of  this 
chapter.  Whenever  any  domestic  insurance  corporation  changes 
the  number  of  its  directors  or  increases  or  reduces  the  amount  of 
its  capital  stock,  pursuant  to  and  in  conformity  with  the  pro- 
visions of  the  stock  corporation  law,  it  may  file  in  the  office  of 
the  superintendent  of  insurance  a  complete  copy  of  its  charter, 
duly  authenticated,  containing  the  changes  of  its  capital  stock  or 
its  directors,  or  both,  as  the  case  may  be.  Such  charter  shall 
not  be  filed  until  it  has  attached  thereto  the  certificate  of  approval 
of  the  attorney-general,  as  provided  in  section  ten  of  this  chapter. 

Source.— Former  §  52,  as  amended  by  L.  1893,  chap.  725;  L.  1901,  chap.  722; 
L.  1905,  chap.  574,  and  L.  1906,  chap.  326;  originally  revised  from  L.  1860, 
chap.  328,  §  3. 

Amended  by  L.  1910,  chap.  634;  L.  1911,  chap.  47,  and  L.  1913,  chap.  48. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  48  of  1913 
was  to  remove  from  the  law  certain  unnecessary  and  cumbersome  procedures 
in  relation  to  the  reorganization  of  existing  corporations  and  the  amendment 
of  the  certificates. — Ed. 


70  The  Insurance  Law.  §  52. 

Note. —  Section  52  was  amended  by  L.  1911,  chap.  47,  so  as  to  make  it 
possible  for  insurance  corporations  to  give  up  certain  powers  provided  in  their 
original  articles  of  incori>oration  which  they  may  never  have  exercised,  or, 
if  exercised,  abandoned. —  Ed. 

See  §  206,  post.    Reincorporation  of  co-operative  insurance  companies. 

TRANSFER. — There  is  no  provision  in  the  Insurance  Law  which  warrants 
the  transfer  of  corporate  rights  and  franchises  to  an  individual  acting  as 
general  agent  in  another  state.    Attorney-General  Rep.,  1896,  page  276. 

The  provision  of  this  section  that  "  this  section  shall  apply  to  insurance 
companies  organized  under  or  subject  to  article  VI "  was  not  intended  to 
prevent  insurance  companies  organized  under  the  other  articles  of  the  Insur- 
ance Law  from  amending  their  charters  by  inserting  therein  any  statement 
or  matter  which  might  have  been  originally  inserted  therein.  In  re  Lawyers' 
Mort.  Co.,  Attorney-General  Rep.,  1905,  page  453. 

When  the  legislature  reserves  the  right  to  amend  or  repeal  charters,  a 
law  permitting  mutual  life  associations  to  reincorporate  as  regular  life  insur- 
ance companies  is  not  unconstitutional  as  impairing  the  obligations  of  con- 
tracts or  depriving  the  policy  holders  of  property  without  due  process  of  law. 
Wright  V.  Minn.  Mut.  Life  Ins.  Co.,  193  U.  S.,  657. 

Thp  Tight  to  repeal  or  amend  charters  is  equally  effectual  whether  it  be 
reserved  in  the  original  act  of  incorporation,  the  articles  of  association  under 
B  general  law,  or  in  the  Constitution  of  the  state.  Polk  v.  Mut.  Reserve 
Fund,  207  U.  S.,  310. 

Amendments  to  charter  of  an  insurance  company,  which  do  not  enlarge 
its  franchises,  do  not  render  necessary  a  republication  of  the  notice  of  inten- 
tion to  organize. 

An  insurance  company  whose  charter  and  declaration  were  tiled  and 
approved,  but  which  was  not  organized  under  the  former  law,  may  be 
organized  under  the  present  Insurance  Law  without  republication  of  notice. 
In  re  Great  Eastern  Cas.,  etc.,  Co.,  Attorney-General  Rep.,  1892,  page  394. 

Section  52,  as  amended  by  chap.  722  of  1901  (and  since  this  decision 
amended  by  chap.  326  of  1906),  when  taken  together  with  the  charter  of 
the  defendant,  incorporated  under  chap  463  of  1853,  cannot  be  construed  as 
an  act  of  the  legislature  authorizing  the  board  of  directors  to  alter  the 
corporate  control  of  the  company  by  giving  to  policyholders  power  to  partici- 
pate in  the  election  of  directors,  and  in  the  absence  of  express  legislation 
permitting  it  said  directors  have  no  such  power.  Lord  v.  Equitable  Life 
Assur.  Soc,  109  App.  Div.,  253,  below;  47  Misc.,  187. 

The  legislature  by  the  amendment  of  §  52  by  chap.  320  of  1900,  enfranchised 
policyholders  with  the  consent  of  stockholders  holding  a  majority  of  the  stock, 
to  vote  for  directors  and  had  the  power  to  do  so;  while  the  directors  had  the 
right  to  limit  the  powers  of  the  policyholders  to  vote  for  only  a  part  of  the 
directors,  they  had  no  right  to  thus  limit  the  power  of  the  stockholders.  Lord 
V.  Equitable  Life  Assur.  Soc.,  194  N.  Y.,  212,  rev'g  126  App.  Div.,  937. 

The  provisions  of  chap.  326  of  1906,  although  they  take  from  the  stock- 
holders of  an  existing  corporation  the  right  to  vote  for  all  of  the  directors  and 
give  to  the  policyholders  an  exclusive  right  to  vote  for  a  majority  of  them, 
are  not  for  that  reason  unconstitutional.  Lord  v.  Equitable  Life  Assurance 
Society,  57  Misc.,  417. 


§  53.  General  Pkovisions.  71 

BOARD  OF  DIREUTOKS.— Section  52,  in  regard  to  the  amendment  of  a 
charter  of  a  corporation,  contemplates  corporate  action  by  the  board  ol 
directors  only  and  not  the  coriwrate  action  of  the  stockholders.  Lord  v. 
Equitable  Life  Assur.  Soc,  47  Misc.,  187;  aff'd  109  App.  Div.,  252. 

ASSESSMENT  LIFE  INSURANCE.— A  company  formed  for  the  purpose 
of  transacting  the  business  of  assessment  life  insurance  cannot  alter  its 
charter  to  include  casualty  insurance  if  thereby  the  acquired  rights  and 
liabilities  of  existing  policyholders  are  altered.  Attorney-General  Rep.,  1892, 
page  293. 

TAX. —  A  corporation  formed  by  the  consolidation  of  previously  existing 
corporations  is  liable  to  a  tax  of  one-eighth  of  one  per  cent  on  the  amount 
of  its  capital  stock  required  to  be  paid  on  filing  incorporation  papers,  though 
each  of  the  corporations  so  consolidated  paid  such  tax  on  its  own  incorpora- 
tion.   People  V.  Rice,  11  N.  Y.  Supp.,  249. 

VALUATION.— When  an  insurance  company  originally  organized  as  a 
fraternal  organization  has  thereafter  successively  incorporated  as  a  mutual 
company  and  as  a  stock  company,  under  chapter  690  of  the  Laws  of  1893, 
the  valuation  of  policies  issued  when  the  corporation  was  a  mutual  company 
for  the  purpose  of  ascertaining  the  amount  of  reserve,  should  be  made  under 
§  52  of  the  Insurance  Law,  if  such  valuation  does  not  violate  any  provision, 
express  or  implied,  of  the  original  contract  of  insurance;  the  reserve  need 
not  be  determined  by  valuing  such  policies  as  whole  life  policies  under  §  86 
of  the  Insmrance  Law.  Elder  v.  Bankers'  Life  Insurance  Co.,  117  App.  Div., 
722. 

A  surety  corporation  incorjx)rated'  on  June  9,  1897,  may  not  change  the 
number  of  directors  or  increase  its  capital  stock  by  amending  its  c'harter  under 
section  52  but  must  proceed  under  sections  26  and  64  of  the  Stock  Corpora- 
tion Law.     Attorney-General  Rep.,  Jan.  24,  1911. 

§  53.    General  penalties. 

Any  corporation  or  person  violating  any  provision  of  thib 
chapter,  except  where  such  violation  constitutes  a  felony,  shall 
in  addition  to  any  penalty  otherwise  prescribed  for  such  violation, 
be  guilty  of  a  misdemeanor. 

Source.— Former  §  53,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1851,  chap.  95,  §  9;  L.  1853,  chap.  463,  §  18;  L.  1871,  chap.  888,  §  9; 
L.  1877,  chap.  439,  §  3,  as  amended  by  L.  1881,  chap.  628;  L.  1879,  chap.  489. 
§  5;  L.  1880,  chap.  110,  §  5;  L.  1880,  chap.  428,  §  3. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  statr 
without  certificate  of  authorization  by  superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  ir 
office  of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  fileo 
in  county  clerk's  office. 

See  §  32,  ante.    Renewal  of  certificate. 

See  §  49,  ante.  Any  person  aiding  in  the  transaction  of  business  of 
foreign  corporation  is  deemed  an  agent  thereof. 

See  §  50,  ante-     Agent's  certificate  of  authority. 


72  The  Insuiiance  Law.  §  54. 

See  §  54,  post.    Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  post.     Certificate  of  authority  of  agents. 

See  §  137,  post.    License  to  agents  in  certain  cases. 

PENALTY. —  To  maintain  an  action  to  recover  the  penalty  imposed  by 
the  act  of  1853  it  is  not  necessary  to  set  forth  the  statute  in  the  complaint; 
it  is  sufficient  to  state  that  the  acts  complained  of  were  in  violation  of  the 
insurance  statutes  of  the  state.    People  v.  McCann,  67  N.  Y.,  506. 

LLOYDS. —  Lloyds  associations  cannot  engage  in  the  business  of  insurance 
in  this  state  except  as  agents  of  persons  or  corporations  so  authorized  unless 
possessed  of  capital  required  of  insurance  corporations  doing  the  same  kind 
of  business  in  this  state  and  invested  in  the  same  manner;  a  violation  of 
the  provisions  of  §  54  of  the  Insurance  Law  is  not  a  criminal  oli'en&e;  the 
only  remedy  is  by  an  action  for  a  penalty  under  §  53.  In  re  Derrick, 
Attorney-General  Hep.,  1903,  page  277.     But  see  Art.  X. 

§  54.  Conduct  of  insurance  business  by  persons  not  incor- 
porated. 

No  person,  partnership,  or  association  of  persons  shall  engage 
in  the  business  of  insurance  in  this  state  except  as  agent  of  a 
person  or  corporation  authorized  to  do  the  business  of  insurance 
in  the  state,  unless  possessed  of  the  capital  required  of  an  insurance 
corporation  doing  the  same  kind  of  business  in  the  state  and 
invested  in  the  same  manner;  nor  unless  he  or  they  shall  have 
made  and  deposited  with  the  superintendent  of  insurance  securities 
of  the  same  amount  required  of  an  insurance  corporation  doing 
business  in  this  state,  nor  unless  the  superintendent  of  insurance 
shall  have  granted  to  him  or  them  a  certificate  to  the  effect  that 
he  or  they  have  complied  with  all  the  provisions  of  law  which  an 
insurance  corporation  doing  business  in  this  state  is  required  to 
observe,  and  that  the  business  of  insurance  specified  therein  may 
be  safely  intrusted  to  the  person,  partnership  or  association  of 
persons  to  whom  the  certificate  is  granted. 

Every  person,  partnership  or  association  receiving  any  such  cer- 
tificate of  authority  shall  be  subject  to  the  insurance  laws  of  tlie 
state  and  to  the  jurisdiction  and  supervision  of  the  superintendent 
of  insurance  in  the  same  manner  as  if  an  insurance  corporation 
authorized  by  the  laws  of  the  state  to  engage  in  the  business  of 
insurance  specified  in  the  certificate. 

No  such  person,  partnership  or  association  shall  transact  busi- 
ness under  a  corporate  or  fictitious  name  or  under  any  name,  stylo 
or  title  otlier  than  the  true  name  of  such  person,  or  of  the  persona 
comprising  such  partnership  or  association. 


§55.  General  Provisions.  73 

Source. — Former  §  54;  originally  revised  from  L.  1853,  chap.  463,  §§  14,  15, 
as  amended  by  L.  1863,  chap.  300;  L.  1877,  chap.  439,  §  2,  as  amended  by  L. 
1881,  chap.  628. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  stat** 
without  certificate  of  authorization   by  superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  in 
oflSce  of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  filed 
in  county  clerk's  office. 

See  §  32,  ante.     Renewal  of  certificate. 

See   §  50,  ante.     Agent's  certificate  of  authority. 

See  §  53,  ante.     Penalty  for  violation  of  insurance  law. 

See  §  91,  post.     Certificate  of  authority  of  agents. 

See  §  137,  post.     License  to  agents  in  certain  cases. 

CORPORATIONS. —  Corporations  may  act  as  agents  for  insurance  com- 
panies when  expressly  authorized  so  to  do  by  their  charters,  and  not  other- 
wise.   In  re  Carpenter  &  Co.,  Attorney-General  Rep.,  1893,  page  369. 

DEMURRER. — A  complaint  in  an  action  by  a  foreign  corporation  is 
not  demurrable  for  its  failure  to  show  that  they  have  been  duly  authorized 
to  do  business  within  the  state  of  New  York  as  the  fact  of  compliance  is 
not  a  necessary  part  of  the  complaint,  the  failure  to  comply  being  a  matter 
of  defense.     Thompson  v.  Colonial  Assur.  Co.,  33  Misc.,  37. 

Where  a  tailor  is  hired  to  make  up  into  trousers  material  supplied  by  the 
employers,  and  the  latter  agree  to  pay  the  tailor  the  value  of  his  labor  put 
upon  the  material,  although  it  should  be  damaged  or  destroyed  by  fire,  in 
consideration  of  the  deduction  of  one  per  cent  of  the  agreed  price  of  the 
labor,  the  contract  is  one  of  employment  and  not  of  insurance  within 
the  meaning  of  the  Insurance  Law,  and  is  not  invalid  under  the  provisions 
of  §§  54,  58  and  59  of  that  law.    Stern  v.  Rosenthal,  71  Misc.,  422. 

LLOYDS. —  Lloyds  associations  cannot  engage  in  the  business  of  insurance 
in  this  state  except  as  agents  of  persons  or  corporations  so  authorized  unless 
possessed  of  capital  required  of  insurance  corporations  doing  the  same  kind 
of  business  in  this  state  and  invested  in  the  same  manner;  a  violation  of 
the  provisions  of  §  54  of  the  Insurance  Law  is  not  a  criminal  ofi"ense;  the 
only  remedy  is  by  an  action  for  a  penalty  under  §  53.  In  re  Derrick, 
Attorney-General  Rep.,  1903,  page  277.     But  see  Art.  X. 

§  55.  Insurance  without  the  consent  of  the  Insured 
prohibited. 

'No  policy  of  insurance  shall  be  issued  upon  any  property 
except  upon  the  application  and  in  the  name  of  some  person  having 
an  interest  in  the  property.  No  policy  or  agreement  for  insurance 
shall  be  issued  upon  the  life  or  health  of  another  or  against  loss 
by  disablement  by  accident  except  upon  the  application  of  the 
person  insured;  but  a  wife  may  take  a  policy  of  insurance  upon 


74  The  Insurance  Law.  §  55. 

the  life  or  health  of  her  husband  or  against  loss  by  his  disablement 
by  accident ;  an  employer  may  take  out  a  policy  of  insurance  cover- 
ing his  employees  collectively  for  the  benefit  of  such  as  may  suffer 
loss  from  injury,  death  or  disablement  resulting  from  sickness, 
and  a  person  liable  for  the  support  of  a  child  of  the  age 
of  one  year  and  upward  may  take  a  policy  of  insurance 
thereon,  the  amount  payable  under  which  may  be  made  to  increase 
with  advancing  age  and  which  shall  not  exceed  the  sums  specified 
in  the  following  table,  the  ages  wherein  specified  being  the  ages  at 
time  of  death,  for  an  amount  not  exceeding  the  sum  specified  in  the 
table : 

Bet^veen  the  ages  of  one  and  two  years,  thirty  dollars. 

Between  the  ages  of  two  and  three  years,  thirty-four  dollars. 

Between  the  ages  of  three  and  four  years,  forty  dollars. 

Between  the  ages  of  four  and  five  years,  forty-eight  dollars. 

Between  the  ages  of  five  and  six  years,  fifty-eight  dollars. 

Between  the  ages  of  six  and  seven  years,  one  hundred  and  forty 
dollars. 

Between  the  ages  r  f  seven  and  eight  years,  one  hundred  and 
sixty-eight  dollars. 

Between  tlie  ages  of  eight  and  nine  years,  two  hundred  dollars. 

Between  the  ages  of  nine  and  ten  years,  two  hundred  and  forty 
dollars. 

Between  the  ages  of  ten  and  eleven  years,  three  hundred  dollars. 

Between  the  ages  of  eleven  and  twelve  years,  three  hundred  and 
eighty  dollars. 

Between  the  ages  of  twelve  and  thirteen  years,  four  hundred  and 
sixty  dollars. 

Between  the  ages  of  thirteen  and  sixteen  years,  five  hundred 
and  twenty  dollars. 

Between  the  ages  of  sixteen  and  seventeen  years,  six  hundred 
and  twelve  dollars. 

Between  the  ages  of  seventeen  and  eighteen  years,  seven  hundred 
dollars. 

Between  the  ages  of  eighteen  and  nineteen  years,  seven  hundred 
and  eighty-four  dollars. 

Between  tlie  ages  of  nineteen  and  twenty  years^  eight  hundred 
and  fifty-five  dollars. 

Between  the  ages  of  twenty  and  twenty-one  years,  nine  hundred 
and  thirty  dollars. 


§55.  General  Protisions.  76 

In  respect  of  insurance  heretofore  or  hereafter,  by  any  person 
not  of  the  full  age  of  twenty-one  years  but  of  the  age  of  fifteen 
years  or  upwards,  effected  upon  liie  life  of  such  minor,  for  the 
benefit  of  such  minor  or  for  the  benefit  of  the  father,  mother, 
husband,  wife,  brother  or  sister  of  such  minor,  the  assured  shall 
not,  by  reason  only  of  such  minority,  be  deemed  incompetent  to 
contract  for  such  insurance  or  for  the  surrender  of  such  insurance, 
or  to  give  a  valid  discharge  for  any  benefit  accruing,  or  for  money 
payable  under  the  contract. 

Source. — Former  §  55,  as  amended  by  L.  1902,  chap.  437 ;  new. 
Amended  by  L.  1910,  chap.  G34,  and  L.  1913,  chap.  519.    In  effect  May  15, 
1913. 

Note. — The  purpose  of  tlhe  amendment  of  this  section  by  chap.  519  of  1913 
was  to  authorize  employers  to  take  out  policies  covering  employees  col- 
lectively for  the  benefit  of  such  as  might  suffer  loss  from  death  or  disable- 
ment resulting  from  sickness;  formerly  sudi  policies  were  limited  to  accident 
insurance. — Ed. 

N'ote. —  Before  the  amendment  of  this  section  by  chap.  634  of  1910,  a 
person  liable  for  the  support  of  a  child  could  only  take  out  a  yearly 
renewable  term  policy,  but  this  limitation  as  to  the  form  of  policy  was 
stricken  out  by  siaidl  amendment. —  Ed. 

See  §  52,  Domestic  Relation  Law,  chap.  19  of  1909.  Insurance  by  wife  of 
husband's  life. 

See  Personal  Property  Law,  §  15.  Personal  property  not  alienable  in  certain 
cases. 

A  policy  issued  prior  to  the  enactment  of  this  section  insuring  a  manu- 
facturing company  against  loss  to  property  from  an  explosion  or  rupture 
of  boilers,  "also  against  loss  of  human  life  or  injury  to  person,  whether  to 
the  assured,  the  employees,  or  to  any  other  person  or  persons,  caused  by  such 
explosion  or  rupture,  payable  to  the  assured  for  the  benefit  of  the  injured 
person  or  persons,  or  their  legal  representatives  in  case  of  death,  and  not 
contingent  upon  the  legal  liability  of  the  assured,"  is  to  be  deemed  as  having 
been  intended  at  most  as  a  pecuniary  indemnity  to  the  legal  representatives 
of  an  employee  for  the  loss  sustained  by  them  in  consequence  of  his  death. 
Embler  v.  Hartford  Steam  Boiler  Ins.  Co.,  158  N.  Y.,  431. 

There  is  no  provision  of  the  Insurance  Law,  that  prohibits  the  issuing  of 
a  life  insurance  policy,  having  an  institution  the  beneficiary  instead  of  a 
person,  but  if  tbe  application  were  made  by  the  institution,  it  would  fall 
within  the  prohibition  of  section  55.    Ruling  Ins.  Dept.,  Aug.  10,  1011. 

CREDITOR'S  LIEN. —  A  surrogate  has  no  jurisdiction  to  enforce  a  cred- 
itor's lien  against  insurance  moneys  under  §  22  of  the  Domestic  Relations 
Law,  chap.  272  of  1896;  the  proper  course  is  by  a  representative  action 
to  establish  and  enforce  the  lien  after  the  assets  of  the  estate  have  been 
exhausted.    Matter  of  Thompson,  184  N.  Y.,  36;    rev'g  102  App.  Div.,  617. 

INFANTS. —  Co-operative  insiu-ance  companies  cannot  insure  the  lives  of 
infants.    In  re  Mut.  Life  Assn.,  Attorney- General  Rep.,  1892,  page  366. 

This  section,  providing  that  a  minor  shall  not  be  deemed  incompetent  to 
contract  for  insurance,  is  not  declaratory  of  the  common  law,  but  in  con- 


'76  The  Insurance  Law.  §  55. 

travention  thereto;  it  is  immaterial  that  the  policy  sought  to  be  rescinded  was 
an  endowment  policy,  as  the  infant  may  make  a  valid  contract  in  any  of 
the  common  forms.  Hamm  v.  Prudential  Insurance  Co.,  137  App.  Div.,  504. 
If  the  personal  contract  of  an  infant,  beneficial  to  himself,  is  fair  and  rea- 
sonable and  free  from  fraud  and  has  been  wholly  or  partly  executed  on  both 
sides  and  the  infant  has  disposed  of  what  he  has  received,  or  the  benefits 
received  by  him  are  such  that  they  cannot  be  restored  as  in  a  contract  of 
insurance,  he  cannot  recover  back  what  he  has  paid.  Johnson  v.  North  West- 
ern Mutual  Life  Ins.  Co.,  56  CVIinn.,  305;  45  Am.  St.  Rep.,  473. 

Co-operative  or  assessment  companies  have  no  power  to  receive,  as  mem- 
bers,  infants   of   such   tender   years   that   they   are   unable   to   exercise    any 
.   choice  in  becoming  members  or  to  exercise  the  powers  with  which  members 
are  invested  under  the  act.    Matter  of  G.  M.  B.  Ass'n,  135  N.  Y.,  280. 

The  general  provisions  of  this  section  providing  that  a  person  liable  for 
the  support  of  a  child  of  the  age  of  one  year  and  upward  may  take  a  yearly 
renewal  term  policy  of  insurance  upon  the  life  of  such  child,  does  not 
extend  the  scope  of  article  6  of  the  Insurance  Law,  which  forbids  a  life  insur- 
ance company,  conducted  upon  the  assessment  plan,  from  issuing  such  a 
policy.     People  v.  Industrial  Benefit  Ass'n.,  92  Hun,  311;  aff'd  149  N.  Y.,  606. 

The  insuring  of  infants  by  assessment  life  and  casualty  insurance  corpora- 
tions doing  business  under  the  provisions  of  article  G  of  the  Insurance  Law  is 
not  permitted.    Atty.-Gen.  Dec,  March  23,  1910. 

The  provisions  of  §  55  fixing  the  amount  of  insurance  which  may  be  taken 
on  the  life  of  a  child  by  a  person  liable  for  its  support  does  not  alone  restrict 
the  amount  of  insurance  by  a  single  policy,  but  limits  the  total  amount  of 
such  insurance.  Flynn  v.  Prudential  Ins.  Co.,  207  N.  Y.,  315,  rev'g  145  App. 
Div.,  704. 

As  this  section  makes  an  infant  over  fifteen  years  of  age  competent  to  con- 
tract for  life  insurance,  a  person  who  has  paid  the  premiums  for  the  infant 
at  his  request  can  recover  the  amount  from  the  infant  the  same  as  he  might 
recover  for  necessaries  furnished.  Equitable  Trust  Co.  v.  Moss,  149  App. 
Div.,  615. 

ASSIGNMENT  OF  POLICY.— A  policy  of  insurance  for  the  benefit  of  a 
wife  upon  the  life  of  her  husband  is  not  assignable  except  in  the  cases  where 
assignments  are  authorized  by  statute,  and  an  assignment  thereof  cannot  be 
compelled  by  a  decree  of  the  court,  nor  can  the  avails  thereof  be  appro- 
priated in  advance  by  operation  of  law  to  the  payment  of  debts,  or  sub- 
jected to  the  lien  of  creditors  either  of  herself  or  her  husband.  Baron  v. 
Drummer,  100  N.  Y.,  372. 

The  provisions  of  chap.  248  of  1879,  providing  that  policies  of  life  insur- 
ance issued  **  upon  the  lives  of  husbands  for  the  benefit  and  use  of  their 
wives "  shall  be  assignable  by  said  wife,  with  the  written  consent  of  the 
husband  do  not  require  the  written  consent  of  the  wife  to  a  transfer  by 
the  husband  of  his  interest,  arising  out  of  his  option  to  convert  the  policy 
into  cash.    Travelers'  Insurance  Co.  v.  Ilealey,  25  App.  Div.,  53. 


§55.  General  Provisions.  77 

An  assignment  of  a  policy  in  a  foreign  life  insurance  company,  issued  upon 
♦;he  life  of  a  husband,  in  which  the  wife  is  the  beneficiary,  is  valid,  where 
the  assignment  is  made  by  the  wife  with  the  written  consent  of  her  husband, 
although  the  assignee  has  no  interest  in  the  life  of  the  husband,  and  merely 
takes  the  assignment  upon  an  agreement  that  he  shall  have  an  interest  of 
two-thirds  in  the  policy,  provided  he  pays  the  premiums  upon  it  and  prevents 
it  from  lapsing.     Fuller  v.  Kent,  13  App.  Div,,  529. 

Where  a  person  takes  out  a  policy  of  insurance  upon  his  own  life,  and  the 
amount  is  made  payable  to  another  having  no  interest  in  the  life,  or  where 
the  insured  assigns  his  policy  to  one  having  no  such  interest,  the  beneficiary 
or  the  assignee  may  hold  or  enforce  the  policy,  if  it  was  valid  in  its  inception, 
and  was  procured  or  the  assignment  made  in  good  faith.  Olmstead  v.  Keyes, 
85  N.  Y.  593. 

It  is  the  doctrine  of  this  state,  that  a  policy  of  life  insurance  taken  out  by 
the  insured  himself  or  by  another  having  an  insurable  interest  in  his  life,  ir> 
good  faith  and  not  for  the  mere  purpose  of  assignment,  may  be  lawfully 
assigned  to  one  having  no  insurable  interest  in  the  life  of  the  one  insured; 
and  that  the  assignee,  when  the  assignment  is  general  and  absolute,  will  be 
entitled  to  the  entire  proceeds  of  the  policy;  the  fact  that  the  insured's  con- 
dition of  health  has  failed  does  not  deprive  him  of  the  right  to  realize  on  hi» 
policy  by  its  assignment.     Steinback  v.  Diepenbrock,  158  N.  Y.,  24. 

Evidence  that  a  husband  delivered  a  policy  of  insurance  upon  his  life  to  bi« 
wife  as  a  gift,  and  that  she  thereafter  paid  all  the  premiums  thereon,  i« 
Buflficient  to  warrant  a  jury  in  finding  both  a  gift  and  an  assignment  of  the 
policy  to  the  wife,  vesting  her  with  the  legal  title  thereto,  although  the  poliev 
contained  a  provision  that  it  should  not  be  assigned  unless  in  writing.  Griffir 
V.  Prudential  Ins.  Co.,  43  App.  Biv.,  499. 

A  policy  of  insurance  contained  a  clause  declaring  that  it  could  be  assigned 
only  on  the  written  approval  of  the  company;  it  did  not  declare  that  a  viola- 
tion of  the  provision  would  avoid  the  policy;  in  an  action  thereon  it  was  held 
that  a  violation  of  this  provision  did  not  involve  a  forfeiture,  and  that  an 
assignee  could  enforce  the  policy,  although  the  insurer  had  not  consented  to 
the  assignment.     Marcus  v.  St.  Louis  Mut.  L.  Ins.  Co.,  68  N.  Y.  62t:. 

Stipulation  in  a  policy  of  insurance,  issued  upon  the  life  of  a  husband  for 
the  benefit  of  his  wife,  against  the  assignment  thereof,  inserted  solely  for 
the  advantage  of  the  company,  cannot  avail  the  wife  as  against  one  to  whoni 
she  has  assigned  the  policy  under  the  statute,  where  the  company  has  declined 
to  take  advantage  of  the  stipulations  and  has  paid  the  proceeds  of  the  policy 
iuto  court.     Spencer  v.  Myers,  150  N.  Y.,  269. 

The  statutes  relating  to  life  insurance  issued  for  the  benefit  of  a  married 
woman,  refer  to  a  contract  made  by  her  in  her  own  name,  or  in  the  name  of 
a  third  person  with  his  assent  as  her  trustee,  for  insurance  upon  the  life  of 
her  husband,  and  not  to  a  contract  made  by  him  for  her  benefit.  Bradshaw  v. 
Mutual  Life  Ins.  Co.,  187  N.  Y.,  347;  rev'g  109  App.  Div.,  375. 

A  married  woman  as  a  beneficiary  in  a  policy  of  insurance  on  the  life  oi 
her  husband  is  entitled  to  the  proceeds  of  the  policy  notwithstanding  a 
divorce  obtained  by  her  before  his  death.  Overhiser,  Adm'x.  v.  Overhiser  et 
al.,  63  Ohio  St.,  77.     But  see   §   1761,  Code  Civ.  Proc. 


78  The  Insurance  Law.  §§  56, 57. 

§  56.    Foreign  insurance  companies. 

Companies  from  other  states  and  countries  hereafter  applying 
for  admission  to  this  state  shall  be  possessed  of  at  least  the  amount 
of  capital  required  'for  companies  organized  under  the  laws 
of  this  state,  which  amount  of  capital  of  such  companies 
must  be  fully  paid  in  cash.  It  shall  be  the  duty  of  the  super- 
intendent of  the  insurance  department  to  refuse  admission  to  any 
such  company  unless  its  assets  are  of  the  same  general  character 
that  companies  of  this  state  are  permitted  to  hold,  nor  shall  any 
such  company  be  admitted  to  transact  business  in  this  state  unless 
it  shall  file  in  the  office  of  the  superintendent  of  the  insurance 
department  an  agreement  under  its  corporate  seal  that  it  will  not 
transact  in  this  state  any  business  which  any  fire  insurance  com- 
panies of  this  state,  organized  under  the  general  act,  are  pro- 
hibited from  transacting;  and  any  company  violating  the  pro- 
visions of  said  agreement  shall  have  its  certificate  of  authority 
revoked  by  the  said  superintendent  forthwith,  provided  the  assent 
of  the  attorney-general  shall  be  previously  obtained. 

Source. — li.  1881,  chap.  671,  as  amended  by  L.  1892,  chap.  654,  §  1. 

Amended  by  L.  1910,  chap.  168. 

L.  1892,  chap.  654,  having  been  passed  at  the  same  session  as  the  Insurance 
Law  (L.  1892,  chap.  690)  was  in  force  and  effect  under  former  §  33  of  the 
Statutory  Construction  Act,  notwithstanding  that  L.  1881,  chap.  671,  §  2,  which 
it  purported  to  amend,  was  repealed  by  L.  1892,  chap.  690. 

§  57.    Application  of  article  limited. 

The  provisions  of  this  article  shall  not  apply  to  any  indi- 
vidual or  partnership  or  association  of  underwriters  known 
as  Lloyds  or  as  individual  underwriters  which,  on  the  first 
day  of  October,  eighteen  hundred  and  ninety  two,  was  law- 
fully engaged  in  the  business  of  insurance  within  this  state, 
and  not  required  by  law  to  report  to  the  superintendent  of  insur- 
ance or  the  insurance  department  or  subject  to  their  supervision 
or  examination,  nor  to  any  such  association,  notwithstanding  any 
change  hereafter  made  therein  by  the  death,  retirement  or  with- 
drawal of  any  such  underwriters  or  by  the  admission  of  others  to 
such  association,  except,  however,  that  every  such  individual,  part- 


§57.  General  Provisions.  79 

nership  or  association  of  underwriters  shall,  on  or  before  the  first 
day  of  February  of  each  year,  make  and  file  with  the  superin- 
tendent of  insurance  a  statement  of  its  affairs  during  the  year 
ending  on  the  thirty-first  day  of  December  immediately  preceding, 
which  statement  shall  be  verified  by  tlie  accredited  attorney  of  the 
undenvriters  of  tlie  association  and  shall  be  in  such  form  and 
contain  such  matter  as  the  superintendent  of  insurance  shall 
prescribe. 

No  partnership  or  association  of  underwriters  knowm  as  Lloyda 
or  as  individual  underwriters  which  was  lawfully  engaged 
or  was  lawfully  entitled  to  engage  in  the  business  of  insurance 
in  this  state  on  April  first,  nineteen  hundred  and  two,  and 
which  failed  to  file  with  the  superintendent  of  insurance,  on  or 
before  September  first,  nineteen  hundred  and  two,  a  copy  of  its 
original  articles  of  association  or  co-partnership  agreement,  to- 
gether with  any  amendments  thereto,  duly  verified  by  one  of 
the  members  thereof  by  affidavit  to  the  effect  that  it  is  a  true  copy, 
and  stating  where  the  principal  office  of  such  partnership  or 
association  is  located,  the  kind  of  business  in  which  it  was  engaged 
and  the  name  under  w^hich  it  did  business,  shall  be  permitted  to 
engage  in  or  transact  the  business  of  insurance. 

Source.— Former  §  57,  as  amended  by  L.  1894,  chap.  684;  L.  1902,  chap.  297; 
L.  1903,  chap.  471;  new. 

Amended  by  L.  1909,  chap.  240;  L.  1910,  chap.  634. 

Repealed  by  L.  1910,  chap.  638  (in  effect  Jan.  1,  1911.) 

Note. —  Section  57  was  affected  by  two  laws,  chaps.  634  and  638  of  1910. 
The  first  of  these  chapters  struck  from  such  section  the  excepting  clauses  as 
to  fraternals,  etc.,  but  left  in  the  clauses  as  to  Lloyds.  This  law  went  into 
effect  July  1st.  Hence,  section  57  had  reference  to  Lloyds;  but  the  Lloyds 
bill  proper  —  chap.  638  of  1910  —  repealed  section  57  in  toto,  such  repeal,  how- 
ever, not  going  into  effect  until  January  1,  1911.  The  purpose  of  this  peculiar 
method  of  legislation  was  to  prevent  a  repetition  of  what  happened  in  1892 
by  keeping  up  the  bars  against  Lloyds  until  the  new  Lloyds  article  shall  be 
put  into  full  effect  on  January  1,  1911.  The  governor  signed  the  life  article 
bill  on  June  23d,  and  the  Lloyds  bill  on  the  24th.  Hence,  the  Lloyds  bill  is 
the  later  of  the  two  executive  acts  and  thus  controls. — Editor. 

LLOYDS. —  The  Columbia  Fire  Lloyd's,  an  association  organized  prior  to 
:)rtober  1,  1892,  and  whose  existence  terminated  September  30,  1897,  is  not 
=*mpowered  to  continue  business  as  a  "  Lloyd's  "  association  under  section  67 
of  the  Insurance  Law.     Attorney-General  Rep.,  1867,  page  175.     (See  Art.  X.) 


80  The  Insurance  Law.  §  57. 

An  agent  of  the  "American  Lloyds,"  an  association  of  individual  tire  under- 
writers not  incorporated  by  the  laws  of  this  state,  is  not  exempted  from  the 
application  of  section  523  of  the  New  York  City  Consolidation  Act  by  the 
fact  that  nc  such  association  was  in  existence  when  the  section  was  framed, 
or  by  the  tact  that  the  association  was  authorized  to  do  business  by  a  subse- 
quent law  of  the  state.    Fire  Department  v.  Stanton,  159  N.  Y.,  225. 

Lloyds,  not  engaged  in  insuring  against  loss  by  theft  or  burglary  prior  to 
October  1,  1892,  cannot  now  engage  in  such  business.  Attorney -General  Rep., 
1899,  page  329. 

The  present  Insurance  Law  does  not  apply  to  Lloyd  companies  organized 
before  said  law  went  into  effect,  October  1,  1892,  although  organized  subse- 
quently to  the  passage  of  said  law,  May  18,  1892.  Attorney-General  Rep., 
1893,  page  232. 

A  Lloyds  association  actually  engaged  in  the  business  of  insurance  on 
October  1,  1902,  so  that  it  was  expressly  exempted  from  the  prohibition  of 
the  statute,  does  not  forfeit  its  right  by  subsequent  nonuser.  Attorney- 
General's  Rep.,  July  21,  1909. 

ACTION. —  An  action  may  be  maintained  under  section  1948  of  the  Code  of 
Civil  Procedure  against  underwriters  carrying  on  a  Lloyds  insurance.  People 
V.  Loew,  19  Misc.,  248. 

PARTIES  TO  ACTION. —  An  action  upon  a  contract  to  reinsure  the  risks 
of  underwriters  operating  under  the  Lloyds  system,  must  be  brought  by  all 
of  them,  or  by  those  officers,  if  there  be  such,  who,  under  section  1919  of  the 
Code  of  Civil  Procedure,  may  sue  for  an  unincorporated  association  of  more 
than  seven  persons ;  and,  therefore,  where  less  than  all  of  the  underwriters  sue, 
their  complaint  is  demurrable  for  defect  of  parties  plaintiff.  Thompson  v. 
Colonial  Assur.  Co.,  33  Misc.,  37. 

ENGAGED  IN  BUSINESS.— The  phrase,  "engaged  in  business,"  as  used 
in  the  Insurance  Law,  has  reference  to  such  associations  as  were  actually 
doing  business  in  this  state,  having  outstanding  policies  and  contingent 
liabilities,  at  the  date  when  the  Insurance  Law  took  effect.  Atton.ey-General 
Rep.,  1894,  page  99. 

PURPOSE. —  Associations  incorporated,  not  to  engage  in  business  under 
this  section,  but  merely  for  purposes  of  sale,  cannot  lawfully  transact  the 
business  of  insurance  in  this  state.    People  v.  Loew,  23  Misc.,  574. 

FRATERNAL  BENEFICIARY  SOCIETIES.— Section  63  extends  the  juris- 
diction of  the  Superintendent  of  Insurance  to  insurance  corporations  of  every 
character  and,  by  implication  to  authorize  him  to  examine  the  affairs  and 
question  under  oath  the  officers  of  any  fraternal  beneficiary  society  or  town 
and  county  co-operative  insurance  corporation  notwithstanding  the  previous 
exemption  under  section  57;  the  false  swearing  of  any  officer  on  such  exarama- 
tion  is  perjury.    People  v.  Reed,  66  Misc.,  425. 


§  58.  General  Pkovisions.  81 

§  58.    Policy  to  contain  the  entire  contract;  statements  of 
insured  to  be  representations  and  not  warranties. 

Every  policy  of  insurance  issued  or  delivered  within  the  stnt<» 
on  or  after  the  first  day  of  January,  nineteen  hundred  and  sevon, 
by  any  life  insurance  corporation  doing  business  within  the  state 
shall  contain  the  entire  contract  between  the  parties  and  nothitjn' 
shall  be  incorporated  therein  by  reference  to  any  constitution,  by 
laws,  rules,  application  or  other  ^vri tings  unless  tlie  same  arc 
endorsed  upon  or  attached  to  the  policy  when  issued;  and  all  state 
ments  purporting  to  be  made  by  the  insured  shall  in  the  absence 
of  fraud  be  deemed  representations  and  not  warranties.  Any 
waiver  of  the  provisions  of  this  section  shall  be  void. 

Source.— Former  §  58,  as  added  by  L.  1906,  chap.  326. 

Section  58  of  the  Insurance  Law  will  permit  the  indorsement  upon  or  the 
attachment  to  a  deferred  annuity  contract  by  annual  premiums  of  additional 
options  not  conflicting  with  any  provision  of  law.  Ruling  Ins.  Dept.,  March 
4th,  1909. 

An  insurer  who  issues  a  policy  covering  only  death  by  accidental  means  is, 
nevertheless,  engaged  in  the  business  of  life  insurance  and  is  within  the 
provisions  of  section  58,  providing  that  the  policy  shall  contain  the  entire 
contract.     L\Ioore  v.  The  Prudential  Casualty  Co.,   170  A.  D.,  849. 

This  section  applies  only  to  policies  issued  on  or  after  January  1,  1907. 
Perry  v.  Prudential  Insurance  Co.,  144  App.  Div.,  780. 

Where  a  policy  states  that  the  consideration  therefor  is  the  application  of 
the  insured,  which  is  made  part  of  the  contract  and  annexed  to  the  policy, 
the  insurer  cannot  set  out  other  alleged  misrepresentations  as  an  inducing 
cause  of  the  policy,  for  the  reason  that  section  58  requires  that  every  such 
policy  shall  contain  the  entire  contract  and  nothing  shall  be  incorporated 
therein  by  reference  to  other  writings  not  indorsed  upon  or  attached  to  the 
policy;  so  w^here  the  insurer  in  its  answer  sets  out  alleged  misrepresentations 
made  by  the  insured  to  its  examining  physician;  said  allegations  should  be 
stricken  out  where  the  questions  of  the  physician  and  the  answers  were  not 
attached  to  the  policy.  Becker  v.  Colonial  Life  Insurance  Co.,  153  App.  Div., 
382. 

Under  §  58  of  the  Insurance  Law,  every  policy  of  life  insurance  must 
contain  the  entire  contract,  and  in  an  action  thereon  breaches  of  warranty 
in  the  application,  which  was  not  attached  to  the  policy,  are  not  available 
as  a  defense,  in  the  absence  of  fraud.  Cohen  v.  Metropolitan  Life  Insurance 
Co.,  85  Misc.,  406. 

Under  §  58,  which  provides  that  every-  policy  of  life  insurance  issued  after 
January  1,  1907,  shall  contain  the  entire  contract,  statements  of  the  insured 
in    his    application    which    were    neither    indorsed    on,    nor    attached    to,    the 


82  The  Insurance  Law.  §§  59,  60. 

policy  may  not  be  considered  in  an  action  thereon.     Murphy  v.  The  Colonial 
i/to   Ins.  Co.  of  America,  83  Misc.,  475. 

A  defense  or  fraudulent  representations  of  the  insured  in  his  application 
as  to  his  life,  habits  and  other  insurance  cannot  be  sustained  where  the 
application  or  statements  of  the  insured  are  not  attached  to  and  made  part  of 
the  policy.    Mees  v.  Pittsburgh  Life  &  Trust  Co.,  169  App.  Div.,  87. 

False  representations  on  the  part  of  the  insured  in  procuring  the  issuance 
of  a  policj^  are  inadmissible  where  such  representations  were  not  endorsed 
upon  or  attached  to  the  policy  as  required  by  this  section;  evidence  as  to  a 
collateral  agreement  to  the  effect  that  the  policy  was  not  to  take  effect  until 
the  first  premium  was  paid  during  the  good  (health  of  the  insured  is  not 
admissible  where  such  agreement  is  not  part  of  the  policy. 

The  intent  of  this  section  is  to  require  insurance  companies  when  issuing 
policies  to  set  out  therein  the  entire  contract  and  every  statement  which 
induced  the  company  to  enter  into  the  agreement  and  upon  which  it  relied 
in  so  doing  must  ibe  annexed  to  and  made  part  of  the  policy.  Archer  v. 
Equitable  Life  Asisoirance  Society,  169  App.  Div.,  43. 

§  69.    Certain  provisions  in  policies  prohibited. 

No  corporation  issuing  policies  of  insurance  upon  tlie  lives  of 
persons,  whether  such  corporation  is  a  domestic  one,  existing  under 
the  laws  of  the  state,  or  a  foreign  one  which  has  become  entitled  to 
do  business  within  the  state,  shall  provide  in  any  application, 
policy  or  certificate  of  insurance,  that  the  person  soliciting  such  in- 
surance, or  any  person  who  is  engaged  in  the  business  of  soliciting 
Insurance  for  the  company  issuing  such  policy,  or  certificate,  and  . 
whose  compensation  is  either  paid  by  said  company,  or  is  contin- 
gent upon  the  issuing  of  such  policy,  is  the  agent  of  the  person 
insured  under  said  policy  or  certificate,  or  shall  insert  in  said 
policy  or  certificate  any  provision  to  make  the  acts  or  representa- 
tions of  such  person  binding  upon  the  person  so  insured  under 
eaid  policy  or  certificate. 

Source.^ — Former  §  59,  as  added  by  L.  1905,  chap.  568,  and  amended  by  L. 
1906,  chap.  320. 

§  60.    Estimates  and  misrepresentations  prohibited. 

No  life,  health  or  casualty  insurance  corporation,  including 
corporations  operating  on  the  co-operative  or  assessment  plan 
doing  business  in  this  state  and  no  officer,  director  or 
agent     therefor     or     any     other     person,     co-partnership     or 


§  60.  General  Pkovisions.  83 

corporation  shall  issue  or  circulate,  or  cause  or  permit  to  be 
issued  or  circulated,  any  illustration,  circular  or  statement  of  any 
sort  misrepresenting  the  terms  of  any  policy  issued  by  any  such 
corporation  or  the  benefits  or  advantages  promised  thereby,  or 
any  misleading  estimate  of  the  dividends  or  share  of  surplus  to 
be  received  thereon,  or  shall  use  any  nam^e  or  title  of  any  policy 
or  class  of  policies  misrepresenting  the  true  nature  thereof.  Nor 
shall  any  such  corporation  or  agent  thereof  or  any  other  person, 
co-partnership  or  corporation  make  any  misleading  representation 
or  incomplete  comparison  of  policies  to  any  person  insured  in 
any  such  corporation  for  the  purpose  of  inducing  or  tending  to 
induce  such  person  to  lapse,  forefeit,  or  surrender  his  said  in- 
surance. The  superintendent  of  insurance  may  in  his  discretion 
revoke  the  certificate  of  authority  issued  to  any  corporation  or 
agent  on  his  being  satisfied  that  such  corporation  or  agent  has 
violated  any  of  the  provisions  of  this  section.  Any  violation  of 
this  section  shall  constitute  a  misdemeanor,  and  it  shall  be  the  duty 
of  the  superintendent  of  insurance  to  revoke  the  certificate  of 
authority  of  the  corporation  or  agent  on  a  conviction  for  so 
offending. 

Source. — Former  §  60,  as  added  by  L.  1906,  chap.  326,  and  amended  by  L. 
1908,  chap.  347. 

Amended  by  L.  1911,  chap.  533,  and  L.  1913,  chap.  47. 

Note. —  Section  60  was  amended  by  L.  1911,  chap.  533,  so  as  to  prohibit  the 
making  of  any  misleading  representation  concerning,  or  incomplete  compari- 
sons of,  life  insurance  policies.  It  was  intended  to  penalize  the  practice  of 
certain  agents  of  furnishing  incom,plete  comparisons  of  the  experience  of 
various  companies,  and  also  to  make  it  possible  to  reach  certain  so-called 
adjustment  bureaus  whicli  were  twisting  insurance  in  this  State. —  Ed. 

Note. — The  amendment  by  L.  1913,  chap.  47,  included  health,  casualty  and 
co-operative  companies  within  the  provisions  of  the  section. —  Ed. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  47  of  1913 
was  to  extend  the  law  in  regard  to  misrepresentation  and  estimates  so  as  to 
include  health  and  casualty  insurance  companies,  and  co-operative  or  assess- 
ment  associations. —  Ed. 

A  writ  of  prohibition  does  not  lie  to  restrain  the  Superintendent  of  Insur- 
ance from  proceeding  with  the  hearing  of  one  charged  with  a  violation  of  §  60; 
such  a  proceeding  by  the  Superintendent  is  judicial  in  its  nature  and  subject 
to  review.    People  ex  rel.  Burr  v.  Kelsey,  129  App.  Div.,  399. 

The  prohibition  in  this  section  applies  to  false  estimates  only,  "  misrepre- 
sentations;" so  held  in  relation  to  so-called  partnership  proposition  of  North- 
western Mutual  Life  Insurance  Co.     Ruling  Ins.  Dept.,  Oct.  31,  1910. 


84  The  Insurance  Law.  §§  61-63. 

§  61.    Receivers  to  make  assessment  on  premium  notes. 

In  case  the  corporation,  -in  regard  to  which  a  receiver  has  been 
or  shall  hereafter  be  appointed,  is  or  shall  be  a  mutual  insur- 
ance company,  such  receiver  shall  have  full  power  under  the 
jHithority  and  sanction  of  the  court  appointing  him,  to  make  all 
such  assessments  on  the  premium  notes  belonging  to  such  corpora- 
tion as  may  be  necessary  to  pay  the  debts  of  such  corporation,  as 
by  the  charter  thereof  the  directors  of  such  corporation  have  au- 
thority to  make;  and  the  notice  of  such  assessment  may  be  given 
in  the  same  manner  as  is  provided  in  the  charter  of  said  company 
for  the  directors  of  said  company  to  give;  and  the  said  receiver 
shall  have  like  rights  and  remedies,  upon  and  in  consequence  of 
the  non-payment  of  such  assessments,  as  are  given  to  the  corpora- 
tion or  the  directors  thereof  by  the  charter  of  such  corporation. 
Source.—  L.  1852,  chap.  71,  S  2. 

§  62.    Surrender  of  policies  to  receiver. 

Such  receiver  is  authorized  to  receive  a  voluntary  surrender  of 
all  policies  issued  by  such  corporation,  or  to  cancel  the  policies 
issued  by  such  corporation,  in  all  cases  where  by  the  charter  of 
such  corporation,  the  directors  thereof  are  authorized  to  receive 
the  surrender  of,  or  cancel  the  policies  issued  by  such  corporation. 
Source.— L.  1852,  chap.  71,  §  3. 

§  63.  Proceedings  against  and  liquidation  of  delinquent  in- 
surance corporations. 

This  section  shall  apply  to  all  corporations,  associations, 
societies  and  orders  to  which  any  article  of  this  chapter  is 
applicable,  and  to  all  corporations,  associations,  societies  and 
orders  which  are  subject  to  examination  under  any  section  of  thi? 
chapter,  or  which  are  doing  or  attempting  to  do  or  representing 
that  they  are  doing  the  business  of  insurance  in  this  state,  or 
which  are  in  process  of  organization  intending  to  do  such  business 
therein,  anything  as  to  any  such  corporations,  associations, 
societies  or  orders  provided  in  this  article  to  the  contrary  not- 
withstanding; and  the  words  ^'corporation"  or  '' corporntions  " 
herein  shall  also  include  all  such  associations,  societies  and  ordrr? 
as  well  as  all  voluntary  or  unincorporated  associations. 

1.  Whenever  any  domestic  corporation  (a)  is  insolvent;  or  (b) 
has  refused  to  submit  its  books,  papers,  accounts  or  affairs  to  the 
reasonable  inspection  of  the  superintendent,  or  his  deputy  or  ex- 


g  63.  General  Pko visions.  85 

aminer;  or  (o)  has  neglected  or  refused  to  observe  an  order  of 
the  superintendent  to  raake  good  within  the  time  prescribed  by 
law  any  deficiency,  whenever  its  capital,  if  it  be  a  stock  corpora- 
tion, or  its  reserve,  if  it  be  a  mutual  corporation,  shall  have  beoome 
impaired;  or  (d)  has,  by  contract  of  reinsurance  or  otherwise, 
transferred  or  attempted  to  transfer  substantially  its  entire  prop- 
erty or  business,  or  entered  into  any  transaction  the  effect  of 
which  is  to  merge  substantially  its  entire  property  or  business  in 
the  property  or  business  of  any  other  corporation,  association, 
society  or  order,  without  having  first  obtained  the  written  approval 
of  the  superintendent ;  or  (e)  is  found,  after  an  examination,  to  be 
in  such  condition  that  its  further  transaction  of  business  will  be 
hazardous  to  its  policyholders,  or  to  its  creditors,  or  to  the  public; 
or  (f)  has  wilfully  violated  its  charter  or  any  law  of  the  state;  or 
(g)  whenever  any  officer  thereof  has  refused  to  be  examined  under 
oath  touching  its  affairs;  or  (h),  if  such  corporation  be  organized 
under  article  six,  seven  or  eight  of  this  chapter,  its  condition  is 
found,  after  examination,  to  be  such  that  it  could  not  meet  the  re- 
quirements for  incorporation  and  authorization  specified  in  such 
articles  respectively — ^the  superintendent  may,  the  attorney-general 
representing  him,  apply  to  the  supreme  court  or  any  justice 
thereof  in  the  judicial  district  in  which  the  principal  office  of  such 
corporation  is  located  for  an  order  directing  such  corporation  to 
show  cause  why  the  superintendent  should  not  take  possession  of 
its  property  and  conduct  its  business,  and  for  such  other  relief 
as  the  nature  of  the  case  and  the  interests  of  its  policyholders, 
creditors,  stockholders  or  the  public  may  require. 

2.  On  such  application,  or  at  any  time  thereafter,  such  court 
may,  in  its  discretion,  issue  an  injunction  restraining  such  corpo 
ration  from  the  transaction  of  its  business  or  disposition  of  its 
property  until  the  further  order  of  the  court.  On  the  return  of 
such  order  to  show  cause,  and  after  a  full  hearing,  the  court  shall 
either  deny  the  application  or  direct  such  superintendent,  or  his 
successor  in  office,  forthwith  to  take  possession  of  the  property  and 
conduct  the  business  of  such  corporation,  and  retain  such  possession 
and  conduct  such  business  until,  on  the  application  either  of  the 
superintendent,  the  attorney  general  representing  him,  or  of  such 
corporation,  it  shall,  after  a  like  hearing,  appear  to  the  court  that 
the  ground  for  such  order  directing  the  superintendent  to  take 
possession  has  been  removed  and  that  the  corporation  can  properly 
resume  possession  of  its  property  and  the  conduct  of  its  business. 


86  The  Insurance  Law.  §  63. 

3.  If,  on  a  like  application  and  order  to  show  cause,  and  after 
a  full  hearing,  the  court  shall  order  the  liquidation  of  the  business 
of  such  corporation,  such  liquidation  shall  be  made  by  and  under 
the  direction  of  such  superintendent,  and  his  successors  in  office, 
who  may  deal  with  the  property  and  business  of  such  corporation 
in  their  own  names  as  superintendents  or  in  the  name  of  the  cor- 
poration, as  the  court  may  direct,  and  shall  be  vested  by  operation 
of  law  with  title  to  all  of  the  property,  contracts  and  rights  of 
action  of  such  corporation  as  of  the  date  of  the  order  so  directing 
them  to  liquidate.  The  filing  or  recording  of  such  order  in  any 
record  office  of  the  state  shall  impart  the  same  notice  that  a  deed, 
bill  of  sale  or  other  evidence  of  title  duly  filed  or  recorded  by 
such  corporation  would  have  imparted.  The  rights  and  liabilities 
of  any  such  corporation,  and  of  its  creditors,  policyholders,  stock- 
holders and  members,  and  of  all  other  persons  interested  in  its 
assets,  shall,  unless  otherwise  directed  by  the  court,  be  fixed  as  of 
the  date  of  the  entry  of  the  order  directing  the  liquidation  of  such 
corporation  in  the  office  of  the  clerk  of  the  county  wherein  such 
corporation  had  its  principal  office  for  the  transaction  of  business 
upon  the  date  of  the  institution  of  proceedings  under  this  section. 

4.  Whenever  any  of  the  grounds  of  jurisdiction  over  domestic 
corporations  specified  in  subdivisions  (a),  (b),  (c),  (d),  (e),  (f) 
and  (g)  of  subsection  one  of  this  section  exist  or  arise  with  refer- 
ence to  any  corporation  incorporated  by  or  existing  under  the 
government  or  laws  of  any  country  outside  of  the  United  States 
and  authorized  to  transact  the  business  of  insurance  and  having 
assets  in  this  state;  or  whenever  any  foreign  corporation 
so  authorized  and  having  assets  in  this  state  has  been  placed  in 
the  hands  of  a  receiver  or  had  its  property  sequestrated  in  its 
domiciliary  state  or  country  or  in  any  other  state  or  country,  the 
superintendent  may,  the  attorney-general  representing  him,  ap- 
ply to  the  supreme  court  or  any  justice  thereof  in  the  judicial 
district  in  which  such  corporation  has  its  principal  office  for  the 
transaction  of  business  in  this  state,  for  an  order  directing  such 
corporation  to  show  cause  why  the  superintendent  should  not  take 
possession  of  its  property  and  conserve  its  assets  for  the  benefit 
of  its  creditors,  and  for  such  other  relief  as  the  nature  of  the  case 
and  the  interests  of  its  policyholders,  creditors,  stockholders  or 
the  public  may  require. 


§  63.  General  Provisions.  87 

5.  On  such  application,  or  at  any  time  thereafter,  such  court 
may,  in  its  discretion,  issue  an  injunction  restraining  such  corpo- 
ration and  its  officers,  agents  and  employees  from  the  transaction 
of  its  business  or  disposition  of  its  property  until  the  further  order 
of  the  court.  On  the  return  of  such  order  to  show  cause,  and  after 
a  full  hearing,  the  court  shall  either  deny  the  application  or  direct 
the  superintendent  forthwith  to  take  possession  of  the  property  and 
conserve  the  assets  of  such  corporation,  and  retain  such  possession 
until,  on  the  application  either  of  the  superintendent,  the  attorney- 
general  representing  him,  or  of  such  corporation,  it  shall,  after  a 
like  hearing,  appear  to  the  court  that  the  gi-ound  for  such  order 
directing  the  superintendent  to  take  possession  has  been  removed 
and  that  the  corporation  can  properly  resume  possession  of  its 
property  and  conduct  its  business.  If,  on  such  application,  the 
court  shall  direct  the  superintendent  to  take  possession  of  the  prop- 
erty and  conserve  the  assets  of  such  corporation,  the  rights  and 
duties  of  the  said  superintendent  with  reference  to  such  corpora- 
tion and  its  said  assets  shall  be  those  heretofore  exercised  by  and 
imposed  upon  ancillary  receivers  of  foreign  corporations  in  this 
state. 

6.  For  the  purposes  of  this  section,  the  superintendent  shall 
have  power  to  appoint,  under  his  hand  and  official  seal,  one  or 
more  special  deputy  superintendents  of  insurance,  as  his  agent  or 
agents,  and  to  employ  such  counsel,  clerks  and  assistants  as  may 
by  him  be  deemed  necessary,  and  give  each  of  such  persons  such 
powers  to  assist  him  as  he  may  consider  wise.  The  compensation 
of  such  special  deputy  superintendents,  counsel,  clerks  and  assists 
laits,  and  all  expenses  of  taking  possession  of  and  conducting  the 
business  of  liquidating  any  such  coi*poration  shall  be  fixed  by  the 
superintendent,  subject  to  the  approval  of  the  court,  and  shall, 
on  certificate  of  the  superintendent,  be  paid  out  of  the  funds  or 
assets  of  such  corporation.  During  the  progress  of  any  proceed- 
ings taken  under  this  section,  the  superintendent,  his  deputies  or 
any  examiner  authorized  by  him  and  the  special  deputy  superin- 
tendent of  insurance  acting  for  the  said  superintendent  therein 
shall  have  all  of  the  powers  given  to  the  superintendent,  his 
deputy  or  any  examiner  authorized  by  him,  by  section  thirty-nine 
of  this  chapter,  including  the  power  to  examine  under  oath  the 
persons  specified  in  such  section,  and  to  compel  the  production  of 
books  and  papers  as  therein  provided. 


88  The  Insurance  Law.  §  63. 

7.  For  the  purposes  of  this  section,  the  superintendent  shall 
have  power,  subject  to  the  approval  of  the  court,  to  make  and  pre- 
scribe such  rules  and  regulations  as  to  him  shall  seem  proper. 

8.  The  superintendent  shall  transmit  to  the  legislature,  in  his 
annual  report,  the  names  of  the  corporations  so  taken  possession 
of,  whether  the  same  have  resumed  business  or  have  been  liqui- 
dated, and  such  other  facts  as  shall  acquaint  the  policyholders, 
creditors,  stocldiolders  and  the  public  with  his  proceedings  under 
this  section;  and,  to  that  end,  the  special  deputy  superintendent 
in  charge  of  any  such  corporation  shall  file  annually  with  the 
superintendent  a  report  of  the  affairs  of  sudi  corporation. 

9.  All  acts  of  the  superintendent  of  insurance  in  taking  or  con- 
tinuing in  possession  of  any  property,  or  in  the  regulation,  con- 
duct or  liquidation  of  the  business,  of  any  corporation  to  which 
this  section  is  applicable,  since  the  first  day  of  January,  nineteen 
hundred  and  nine,  whether  such  taking  possession,  continuing  in 
possession,  regulation,  conduct  or  liquidation  was  in  pursuance  of 
a  contract,  by  mutual  consent  or  otherwise,  are  hereby  ratified, 
legalized  and  confirmed. 

10.  At  any  time  after  the  court  shall  order  the  liquidation  of  the 
business  of  any  such  corporation,  as  provided  in  paragraph  num- 
bered three  of  this  section,  the  superintendent  of  insurance  may 
apply  for  the  dissolution  of  such  corporation,  and  the  same,  after 
due  notice  and  hearing  and  such  other  procedure  as  to  the  court 
shall  seem  proper,  shall  be  dissolved. 

11.  The  order  to  show  cause  and  the  papers  upon  which  the 
same  is  made  in  any  proceeding  instituted  under  the  provisions 
of  this  section  shall  he  served  upon  the  corporation  named  in  such 
order  in  the  manner  prescribed  for  personal  service  of  summons 
upon  a  domestic  corporation  by  section  four  hundred  and  thirty- 
one  of  the  code  of  civil  procedure.  When  it  is  satisfactorily 
proved  by  affidavit  that  the  ofiicers  of  the  corporation  named  in 
the  said  order  to  show  cause,  upon  whom  service  is  required  to  be 
made  as  above  provided,  or,  if  a  Lloyds  association  be  named  in 
the  order  to  show  cause,  the  duly  designated  attorney-in-fact,  have 
departed  from  the  state  or  keep  themselves  concealed  therein 
with  intent  to  avoid  service,  such  order  to  show  cause  may 
provide  for  service  thereof  in  such  mianner  as  the  court  or  justice 
by  whom  the  same  is  made,  shall  direct. 


i 


§  63.  General  Provisions.  89 

12.  At  any  time  after  the  commencement  of  proceedings  under 
an  order  of  liquidation  made  pursuant  to  this  section,  the  said 
superintendent  may  remove  the  principal  office  of  the  corporation 
in  liquidation  to  the  county  of  Albany.  In  event  of  such  removal 
the  court  shall,  upon  the  application  of  the  superintendent,  direct 
the  clerk  of  the  county  v^herein  such  proceeding  was  commenced  to 
transmit  all  of  the  papers  filed  therein  with  such  clerk  to  the  clerk 
of  the  county  of  Albany,  and  the  proceeding  shall  thereafter  be 
conducted  in  the  same  manner  as  though  it  had  been  commenced 
in  the  county  of  Albany. 

Source.— Added  by  L.  1909,  chap.  300. 

Amended  by  L.  1910,  chap.  634;  L.  1911,  chap.  366;  L.  1912,  chap.  217,  and 
L.  1913,  chap.  29. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  29  of  1913 
was  to  permit  the  transfer  of  all  liquidation  proceedings  brought  by  the  Sup- 
erintendent of  Insurance  to  the  county  of  Albany. — ^Ed. 

The  jurisdiction  of  the  superintendent  of  insurance  is  extended  over  all 
fraternal  beneficiary  societies  and  town  and  county  co-operative  insurance 
corporations  to  examine  their  affairs  and  question  their  officers  under  oath, 
by  section  63  of  the  Insurance  Law.    People  v.  Reed,  66  Misc.,  425. 

§  63  of  the  Insurance  Law,  contemplates-  that  the  determination,  as  to 
the  creditors  of  an  insolvent  company  and  the  proportionate  share  of  the 
assets  to  which  each  is  entitled,  to  be  determined  by  some  uniform  standard, 
»hall  be  made  as  of  the  date  of  the  entry  of  the  order  of  liquidation,  unless 
the  court,  at  the  time  the  order  is  made,  shall  otherwise  direct  by  specifying 
some  other  date  upon  which  this  determination  shall  be  made.  By  virtue 
of  this  provision,  such  date  can  be  fixed  only  at  the  time  of  the  entry  of 
the  order  of  liquidation  and  must  apply  equally  to  all  Av'ho  have  claims 
against  the  insolvent  estate.  Three  classes  of  claims  against  a  surety  com- 
pany considered  and  held  that  they  had  so  far  ripened  and  matured  as  to 
entitle  claimants  to  share  in  the  distribution  of  the  assets  in  the  hands  of 
the  Superintendent.  Matter  of  Empire  State  Surety  Company,  214  N.  Y., 
533,  aflf'g  165  A.  D.,  135. 

It  seems  that  subdivision  3  of  §  63  of  the  Insurance  Law,  providing  in 
relation  to  the  date  of  the  entry  of  the  order  directing  the  liquidation  of  a 
corporation,  confers  upon  the  court  discretion  to  grant  claimants,  for  damages 
for  accidents  which  happened  prior  to  the  date  of  adjudication,  and  which 
had  not  been  actually  satisfied  by  the  assured  prior  to  such  date,  an  oppor- 
tunity to  perfect  their  claims  into  debts  before  excluding  them  from  par- 
ticipation in  the  assets  of  the  company.  The  word  "  liabilities  "  as  used  in 
the  statute,  should  not  be  construed  to  mean  "  debts."  Matter  of  Empire 
State  Surety  Ompany,  165  A.  D.,  135;  aff'd  214  N.  Y.,  553. 

The  language  of  section  63  is  sufficiently  broad  to  include  in  its  scope  town 
or  county  co-operative  companies  organized  under  article  IX.  Attorney- 
General  Rep.,  July  20,  1909. 


90  The  Insurance  Law.  §§  64,  65. 

The  Supreme  Court,  in  a  proceeding  directing  the  Superintendent  of  Insur- 
ance to  take  possession  of  the  property  and  liquidate  the  business  of  a  surety 
company  under  §  63  may  grant  an  order  restricting  creditors  of  the  surety 
company  from  taking  proceedings  for  the  purpose  of  recovering  their  claims, 
and  where  such  a  restraining  order  is  served  upon  a  creditor  and  he  files 
his  claim  with  the  Superintendent  of  Insurance,  the  Supreme  Court  acquires 
jurisdiction  and  may  punisih  him  for  contempt.  Matter  of  Empire  State 
Surety  Co.,  164  App.  Div.,  586. 

Lloyds  associations  known  as  Lloyds  or  individual  underwriters  are  included 
within  the  broad  scope  of  section  63,  and  materially  extends  tne  authority  of 
the  Superintendent  of  Insurance  over  such  companies,  since  application  may 
be  made  to  the  court,  where  such  associations  "  have  refused  to  submit  books  ** 
or  "  an  officer  thereof  has  refused  to  be  examined,"  for  an  order  to  show 
cause  why  the  superintendent  should  not  take  possession  of  its  property; 
such  application  may  also  be  made  where  an  association  has  willfully  violated 
any  law  of  the  state.     Attorney-General's  Rep.,  June  15,  1909. 

§  64.  Provisions  of  insurance  law  not  to  apply  to  religious 
orders. 

None  of  tlie  provisionfl  of  this  chapter  shall  apply  to  any  corpo- 
ration, organized  under  the  laws  of  any  state  or  territory  of  the 
United  States  solely  for  the  purpose  of  providing  for  the  support 
or  relief  of  the  priests,  clergy  or  ministers  of  any  religious  denomi- 
nation, or  for  the  support  or  relief  of  those  dependent  on  them. 

Source.— Added  by  L.  1910,  chap.  615. 

§  65.    Rebating  and  discriminations  prohibited. 

No  insurance  corporation,  association,  partnership,  Lloyds  or 
individual  underwriters  authorized  or  permitted  to  do  any  insur- 
ance business  within  this  state,  or  any  officer,  agent,  solicitor  or 
representative  thereof,  shall  make  any  contract  for  such  insur- 
ance, on  property  or  risk  located  within  this  state,  or  against 
liability,  casualty,  accident  or  hazard  that  may  arise  or  occur 
therein  or  agreement  as  to  such  contract,  other  than  as  plainly 
express>ed  in  the  policy  issued  or  tx)  be  issued  thereon;  nor  shall 
any  such  corporation,  association,  partnership,  Lloyds  or  in- 
dividual underwriters,  or  officer,  agent,  solicitor  ur  represent- 
ative thereof,  directly  or  indirectly,  in  any  manner  whatsoever, 
pay  or  allow  or  offer  to  pay  or  allow  as  inducement  to  such  in- 
surance, or  after  the  insurance  shall  have  been  effected,  any 
rebate  from  the  premium  which  is  specified  in  the  policy  or  any 
special  favor  or  advantage  in  the  dividends  or  other  benefit  to 


§  65.  General  Provisions.  91 

accrue  thereon,  or  any  valuable  consideration  or  inducement 
whatever,  not  specified  in  the  policy  or  contract  of  insurance,  or 
give,  sell  or  purchase,  or  offer  to  give,  sell  or  purchase,  as  in- 
ducement to  such  insurance,  or  in  connection  therewith,  any 
stock,  bonds  or  other  securities  of  any  insurance  company,  or 
other  corporation  or  association,  or  any  dividends  or  profits 
accrued  thereon,  or  anything  of  value  whatsoever,  not  specified 
in  the  policy,  nor  shall  any  insurance  broker,  his  agent  or 
representative,  or  any  other  person,  directly  or  indirectlv,  either 
by  sharing  commissions  or  in  any  manner  whatsoever  pay 
or  allow  or  offer  to  pay  or  allow  as  inducement  to  such  insur- 
ance, or  after  the  insurance  shall  have  been  effected,  any  rebate 
from  the  premium  which  is  specified  in  the  policy;  nor  shall 
the  insured,  his  agent  or  representative,  directly  or  indirectly 
accept  or  knowingly  receive  any  such  rebate  from  the  premium 
specified  in  the  policy;  this  section  shall  not  prevent  any  cor- 
poration, person,  partnership  or  association  lawfully  doing  such 
insurance  business  in  this  state  from  the  distribution  of  surplus 
and  dividends  to  policyholders  after  the  first  year  of  insurance 
nor  prevent  any  member  of  an  inter-insurance  or  Lloyds  associa- 
tion from  receiving  the  profit  of  his  or  its  underwriting;  nor 
shall  this  section  prevent  any  such  corporation  or  other  insurer, 
or  his  or  its  agent,  from  paying  commissions  to  the  broker  who 
shall  have  negotiated  for  the  insurance,  nor  shall  this  section  pre- 
vent any  licensed  broker  from  sharing  or  dividing  a  commission 
earned  or  received  by  him  with  any  other  licensed  broker  or 
brokers  who  shall  have  aided  him  in  respect  to  the  insurance  for 
the  negotiation  of  which  such  commission  shall  have  been  earned 
or  paid,  and  nothing  herein  contained  shall  be  held  to  prevent  the 
covering  of  risks  by  temporary  binders  or  such  other  memoranda 
as  do  not  conflict  with  the  provisions  of  this  chapter.  !N'or  shall 
this  section  prevent  any  such  corporation  or  other  insurer,  or  any 
agent  or  insurance  broker,  from  distributing  or  presenting  to  any 
person  or  corporation  any  article  of  merchandise  not  exceeding  one 
dollar  in  value,  which  shall  have  conspicuously  stamped  or  printed 
thereon  the  advertisement  of  such  insurance  corporation,  agent  or 
broker. 

No  person  shall  be  excused  from  attending  and,  when  ordered 
so  to  do,  from  testifying  or  producing  any  books,  papers  or  other 


92  The  Insurance  Law.  .  §  QQ, 

documents  before  any  court  or  magistrate,  upon  any  investiga- 
tion, proceeding  or  trial  for  a  violation  of  any  of  the  provisions 
of  this  section,  upon  the  ground  or  for  the 'reason  that  the  testi- 
mony or  evidence,  documentary  or  otherwise,  required  of  him 
may  tend  to  convict  him  of  a  crime  or  subject  him  to  a  penalty 
or  forfeiture,  but  no  person  shall  be  prosecuted  or  subjected  to 
any  penalty  or  forfeiture  for  or  on  account  of  any  transaction, 
matter  or  thing  concer^ing  which  he  may  have  been  required  so 
to  testify  or  to  produce  evidence,  documentary  or  otherwise,  and 
no  testimony  so  given  or  produced  shall  be  received  against  him 
upon  any  criminal  investigation  or  proceeding.  Any  person  or 
corporation  violating  the  provisions  of  this  section  shall  be  guilty 
of  a  misdemeanor  and  shall  forfeit  to  the  people  of  the  state  the 
sum  of  ^ye  hundred  dollars  for  each  such  violation.  This  section 
shall  not  apply  to  any  contract  of  life  insurance  nor  to  any  con- 
tract of  insurance  upon  or  in  connection  with  marine  or  trans- 
portation risks  or  hazards  other  than  contracts  for  automobile 
insurance,  nor  to  contracts  made  by  persons,  associations  or  cor- 
porations authorized  to  do  business  imder  articles  Ryq,  seven  and 
nine  of  this  chapter. 

Added  by  L.  1911,  chap.  416. 

Amended  by  L.  1912,  chap.  225,  and  L.  1913,  chap.  25. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  25  of 
1913  was  to  bring  Assessment  Insurance  Associations  within  the  prohibition 
against  rebates  and  discrimination. —  Ed. 

Commissions  paid  by  the  Fidelity  and  Casualty  Company  of  New  York  city 
to  t!he  New  York  State  Bankers'  Association  on  insurance  placed  by  its  mem- 
bers with  the  company  amount  to  rebates  and  discriminations  as  defined  in 
the  Insurance  Law  although  the  funds  over  are  used  for  association  purposes. 
Attorney-Gleneral  Rep.,  1912,  page  535. 

§  QQ.  Promotion  of  insurance  corporations;  sale  of 
securities. 

1.  As  the  terms  are  used  in  this  section  "  promoting  corpora- 
tion "  means  a  corporation  or  joint  stock  association,  engaged  in 
the  business  of  organizing  or  promoting  or  endeavoring  to 
organize  or  promote  the  organization  of  an  insurance  corporation 
or  corporations,  or  in  any  way  assisting  therein ;  "  holding  cor- 
poration "  means  a  corporation  or  joint  stock  association,  which 
holds  or  is  engaged  in  the  acquisition  of  the  capital  stock  or  a 
major  portion  thereof  of  one  or  more  insurance  corporations  for 


§  QQ.  General  Provisions.  93 

the  purpose  of  controlling  the  management  thereof,  as  voting 
trustees  or  otherwise ;  and  ^'  securities  "  means  the  shares  of  capital 
stock,  subscription  certificates,  debenture  bonds  and  any  and  all 
other  contracts  or  evidences  of  OAvn.ership  of  or  interest  in  in- 
surance corporations,  or  in  promoting  or  holding  corporations  as 
defined  in  this  section. 

2.  No  individual,  partnership,  association  or  corporation,  as 
the  agent  of  another  or  as  broker,  shall  sell  or  offer  for  sale  or  in 
any  way  assist  in  the  sale  in  this  state  of  the  securities  of  any 
promoting  or  holding  corporations,  as  defined  in  this  section,  or  of 
any  insurance  corporation  which  is  not  at  the  time  of  such  sale 
or  offer  for  sale,  lawfully  engaged  or  authorized  to  engage  in  the 
transaction  of  the  business  of  insurance  in  this  state,  without  first 
procuring,  as  hereinafter  provided,  a  certificate  of  authority  from 
the  insurance  department  to  sell  such  securities;  nor  shall  any 
individual,  partnership,  association  or  corporation  sell  or  offer  for 
sale  in  this  state  the  securities  of  any  promoting  or  holding  cor- 
poration as  defined  in  this  section,  or  of  any  insurance  corpora- 
tion which  is  not  at  the  time  of  such  sale  or  offer  for  sale,  lawfully 
engaged  or  authorized  to  engage  in  the  transaction  of  the  business 
of  insurance  in  this  state,  unless  such  corporation  shall  have  first 
procured  from  the  superintendent  of  insurance,  as  hereinafter 
provided,  a  certificate  that  said  corporation  has  fully  complied 
with  the  provisions  of  this  section  and  is  authorized  to  sell  such 
securities.  Every  certificate  issued  by  the  superintendent  of  in- 
surance pursuant  to  the  provisions  of  this  section  shall  state  in 
bold  type  that  the  superintendent  in  no  way  recommends  the 
securities  thereby  authorized  to  be  sold,  and  shall  be  renewable 
annually,  upon  written  application,  filed  on  or  before  the  first 
day  of  January  of  each  year,  and  may  be  revoked  for  cause  at  any 
time  by  such  superintendent.  The  superintendent  shall  prepare 
and  furnish  upon  request  suitable  blank  forms  of  application  for 
the  certificates  required  by  this  section. 

3.  Every  individual,  copartnership,  association  or  corporation 
who  or  which  desires  or  intends  to  sell  or  to  offer  for  sale  in  this 
state,  the  securities  of  any  insurance  corporation  or  of  any  pro- 
moting or  holding  corporation  as  defined  in  this  section,  shall  file 
with  the  superintendent  of  insurance  an  application  for  a  cer- 
tificate of  such  authority.  Such  application  shall  contain  a  state- 
ment, verified  by  oath,  setting  forth  the  name  and  address  of  the 


94  The  Insurance  Law.  §  66. 

applicant,  previous  business  experience,  date  and  place  of  birth  or 
organization,  and  such  other  and  further  information  as  the  said 
superintendent  may  require.  It  shall  be  the  duty  of  the  superin- 
te^ent  of  insurance  to  examine  the  application  so  filed,  and  to 
make  any  further  inquiry  or  examination  of  any  such  applicant 
as  he  may  deem  advisable.  If  upon  such  examination  the  super- 
intendent shall  find  that  the  applicant,  or  applicants,  or  if  a  cor- 
poration, the  officers  and  directors  thereof,  is  or  are  all  trust- 
worthy persons  of  good  business  credit,  the  superintendent  may 
issue  to  such  applicant  a  certificate  of  authority  to  sell  or  offer 
for  sale  in  this  state,  the  securities  of  any  insurance  corporation 
or  corporations  and  of  any  promoting  or  holding  corporation 
previously  authorized  under  this  section  which  shall  be  mentioned 
therein. 

4.  Every  such  unauthorized  insurance  corporation,  and  every 
promoting  or  holding  corporation,  as  defined  in  this  section,  whose 
securities  are  to  be  offered  for  sale  in  this  state,  shall  file  with 
the  superintendent  of  insurance  copies  of  all  securities  to  be 
offered  for  sale,  and  an  application  for  a  certificate  of  authority 
under  this  section  which  shall  contain  a  statement  in  detail  of  the 
plans  and  purposes  of  such  corporation,  the  amount  and  par 
value  of  the  securities  to  be  offered  for  sale  and  the  selling  price 
thereof,  the  manner  in  which  the  moneys  paid  in  therefor  are  to 
be  spent  or  employed,  the  rate  of  commissions  to  be  paid  for 
the  sale  of  such  securities,  the  salaries  to  be  paid  io  the  officers 
of  such  corporation,  and  such  other  and  further  information  as 
the  said  superintendent  may  require.  No  change  shall  thereafter 
be  made  in  the  form  or  character  of  the  securities  to  be  offered 
for  sale,  or  in  the  plans  or  purposes  of  any  such  corporation  with- 
out the  approval  thereof  in  writing  by  the  said  superintendent. 
It  shall  be  the  duty  of  the  superintendent  of  insurance  to  examine 
the  application  and  other  documents  so  filed,  and  to  make  any 
further  inquiry  or  examination  of  any  such  corporation  as  ho  may 
deem  advisable.  If  upon  such  examination  the  superintendent 
shall  find  that  the  plans  and  purposes  of  such  corporation  are 
proper,  that  its  condition  is  satisfactory,  that  the  amount  of  its 
securities  is  reasonable,  that  the  price  at  which  such  securities 
are  to  be  sold  is  adequate,  and  that  the  manner  in  which  the 
moneys  paid  in  therefor,  the  rate  of  commissions  to  be  paid  and 
the  salaries  of  officers  are  fair,  the  superintendent  may  issno  a 


§  66.  General  Provisions.  95 

certificate  that  such  corporation  has  complied  with  all  the  pro- 
visions of  this  section  and  is  authorized  to  sell  or  offer  its  securi- 
ties for  sale  in  this  state. 

5.  The  suporintendent  of  insurance  may  refuse  to  issue  or  re- 
new any  certificate  provided  for  by  this  section,  if,  in  his  judg- 
ment, such  refusal  will  best  promote  the  interest  of  the  people  of 
the  state.  No  individual  whose  certificate  of  authority  granted 
under  this  section  is  revoked,  nor  any  copartnership  of  which  he 
is  a  member,  nor  any  corporation  of  which  he  is  an  officer  or 
director,  shall  be  entitled  to  any  certificate  of  authority  under 
this  section  for  a  period  of  five  years  after  such  revocation ;  and 
if  any  such  certificate  held  by  a  copartnership  or  corporation  is  so 
revoked,  no  member  of  such  copartnership  or  officer  or  director 
of  such  corporation  shall  be  entitled  to  any  such  certificate  for 
the  same  period  of  time. 

6.  'No  printed  matter  shall  be  used  in  connection  with  the  sale 
of  securities  of  any  such  promoting,  holding  or  insurance  cor- 
poration, for  advertising  purposes,  or  in  the  dissemination  of  in- 
formation with  reference  thereto,  unless  such  printed  matter 
shall  first  be  submitted  to  the  superintendent  of  insurance  and 
approved  by  him  in  writing.  No  such  corporation  and  no  offi- 
cer, director  or  agent  thereof,  or  any  other  person,  copartnership, 
association  or  corporation  shall  issue,  circulate  or  employ  or 
cause  or  permit  to  be  used,  issued,  circulated  or  employed  any 
circular  or  statement,  whether  printed  or  oral,  of  any  sort,  mis- 
representing or  exaggerating  the  earnings  of  insurance  corpora- 
tions or  the  value  of  their  corporate  stock,  or  other  securities  or 
the  profits  to  be  derived  either  directly  or  indirectly  from  the 
organization  and  management  of  insurance  corporations  or  of 
organizing  or  holding  corporations  as  defined  in  this  section. 
No  insurance  or  other  corporation,  and  no  individual,  copartner- 
ship or  association,  transacting  business  in  this  state  shall  place 
or  offer  to  place  insurance  in  any  corporation  in  connection  with 
the  sale  or  purchase  of  the  securities  of  any  insurance  corpora- 
tion or  of  any  promoting  or  holding  corporation  as  defined  in 
this  section. 

Added  by  L.  1913,  chap.  52. 

Note.— The  purpose  of  the  addition  of  this  section  by  chapter  52  of  1913 
was  to  bring  all  promotions  of  insurance  corporations  under  the  immediate 
supervision  of  the  Insurance  Department. —  Ed. 


96  The  Insurance  Law.  §  67. 

§  67.    Approval  of  premium  rates. 

Every  insurance  corporation  or  association,  except  the  state 
insurance  fund  as  administered  by  the  state  workmen's  compen- 
sation commission,  authorized  to  transact  business  in  this  state, 
which  insures  employers  against  liability  for  compensation  under 
the  workmen's  compensation  law,  shall  file  with  the  superintend- 
ent of  insurance  its  classification  of  risks  and  premiums  relating 
thereto,  and  any  subsequent  proposed  classification  of  risks  and 
premiums,  together  with  basis  rates  and  schedules,  if  a  system  of 
schedule  rating  be  in  use,  none  of  which  shall  take  effect  until  the 
superintendent  of  insurance  shall  have  approved  the  same  as  ade- 
quate for  the  risks  to  which  they  respectively  apply.  The  super- 
intendent of  insurance  may  withdraw  his  approval  of  any  premium 
rate  or  schedule  made  by  any  insurance  corporation  or  association 
if,  in  his  judgment,  such  premium  rate  or  schedule  is  inadequate 
to  provide  the  necessary  reserves. 

Added  by  L.  1914,  chap.  16.     In  effect  March  4,  1914. 


Life,  Health,  Casualty  Oorpokations.  97 

AETICLE  11. 
Life,  Health  and  Casualty  Insurance  Corporations. 
Section  70.  Incorporation. 

71.  Completion  of  organization. 

72.  Withdrawal  of  securities  upon  relinquishment  of  business. 

73.  Special  deposits  to  secure  registered  policies  and  annuity  bonds. 

74.  Annual  report  of  corporation  of  registered  policies  and  annuity 

bonds. 

75.  Registration  of  policies  and  annuity  bonds. 

76.  When  depositing  corporations  to  be  deemed  insolvent. 

77.  Proceedings  by  receiver. 

78.  Additional  duties  of  receiver. 

79.  Annual  investigation  of  affairs  of  such  corporations;  disposition 

of  surplus. 

80.  Existing  corporations. 

81.  Powers  of  receiver. 

82.  When  receiver  shall  not  be  appointed  or  new  policies  issued. 

83.  Distribution  of  surplus  to  policy  holders. 

84.  Valuation  of  policies. 

85.  When  actual  premium  is  less  than  net  premium. 

86.  Assets  and  liabilities  of  life  and  casualty  insurance  corporations; 

method   of   computation;    procedure    in    case    of    impairment; 
reserve. 

87.  Contingency  reserve. 

88.  Surrender  value  of  lapsed  or  forfeited  policies. 

89.  Discriminations  prohibited. 

90.  Discriminations  against  colored  persons  prohibited. 

91.  Certificate  of  authority  of  agents. 

91 -a.  Agents   for   health  or   accident  insurance. 

92.  No  forfeiture  of  policy  without  notice. 

93.  Valuation  of  policies  of  health  insiu-ance. 

94.  Election  of  directors. 

95.  Conversion  of  a  stock  life  insurance  corporation  into  a  mutual 

life  insurance  corporation. 

96.  Limitation  of  new  business. 

97.  Limitation  of    expenses. 

98.  Salaries  of  officers  and  agents;  when  fixed  by  board  of  directors, 

99.  Vouchers. 

100.  Investments. 

101.  Standard  forms  of  policies. 


98  The  Insurance  Law.  §  70. 

Section  102.  Companies  issuing  participating  policies  not  to  do  a  non-partici- 
pating business. 

103.  Annual  reports  of  life  insurance  corporations. 

104.  Transfer  of  deposits  by  superintendent  of  insurance  to  receiver. 

105.  Powers  of  certain  existing  corporations  increased. 

106.  Boards  of  directors  to  be  divided  into  classes. 

107.  Standard  provisions  for  accident  and  health  policies. 

108.  'Discriminations  under  accident  or  health  policies  prohibited. 

Section  70.    Incorporation. 

Thirteen  or  more  persons  may  become  a  corporation  for  the 
purpose  of  making  any  of  the  following  kinds  of  insurance : 

1.  Upon  the  lives  or  the  health  of  persons  and  every  insur- 
ance appertaining  thereto,  and  to  grant,  purchase  or  dispose  of 
annuities. 

2.  Against  injury,  disablement  or  death  resulting  from  travel- 
ing or  general  accident,  and  against  disablement  resulting  from 
sickness,  and  eveiy  insurance  appertaining  thereto. 

3.  Insuring  any  one  (a)  against  loss  or  damage  resulting  from 
accident  to  or  injury  suffered  by  an  employee  or  other  person,  and 
for  which  the  person  insured  is  liable,  and,  (b)  against  loss  or 
damage  to  property  caused  by  horses  or  by  any  vehicle  drawn  by 
animal  power,  and  for  which  loss  or  damage  the  person  insured  is 
liable. 

4.  Guaranteeing  the  fidelity  of  persons  holding  places  of  public 
or  private  trust.  Guaranteeing  the  performance  of  contracts  other 
than  insurance  policies;  guaranteeing  the  performance  of  insur- 
ance contracts  where  surety  bonds  are  accepted  by  states  or  munici- 
palities; executing  or  guaranteeing  bonds  and  undertakings 
required  or  permitted  in  all  actions  or  proceedings  or  by  law 
allowed;  and  indemnifying  banks,  bankers,  brokers,  financial  or 
moneyed  associations,  or  financial  or  moneyed  corporations, 
against  the  loss  of  any  bills  of  exchange,  notes,  drafts,  accept- 
ances of  drafts,  bonds,  securities,  evidences  of  debt,  deeds,  mort- 
gages, documents,  currency  and  money,  except  that  no  such  con- 
tract or  indemnity  indemnifying  banks,  bankers,  brokers,  finan- 
cial or  moneyed  associations,  or  financial  or  moneyed  corporations, 
shall  indemnify  against  loss  caused  by  marine  risks,  or  risks  of 
transportation  or  navigation. 


§  70.  LiFE^  Health  J  Casualty  Corporations.  99 

4-a.  Guaranteeing  and  indemnifying  merchants,  traders  and 
those  engaged  in  business  and  giving  credit  from  loss  and  damage 
by  reason  of  giving  and  extending  credit  to  their  customers  and 
those  dealing  with  them;  and  corporations  authorized  to  do  such 
last  named  business  in  this  subdivision  mentioned  shall  have  all 
the  powers  conferred  by  section  one  hundred  and  seventy-eight 
of  this  chapter. 

5.  Against  loss  by  burglary,  theft  or  forgery  or  any  one  or 
more  of  such  hazards. 

C.  Upon  glass  against  breakage. 

7.  Upon  steam  boilers  and  pipes,  fly-wheels,  engines  and  machin- 
ery connected  therewith  or  operated  thereby,  against  explosion  and 
accident  and  against  loss  or  damage  to  life  or  property  resulting 
therefrom,  and  against  loss  of  use  and  occupancy  caused  thereby, 
and  to  make  inspection  of  and  to  issue  certificates  of  inspection 
upon  such  boilers,  pipes,  fly-wheels,  engines  and  machinery. 

8.  Upon  the  lives  of  horses,  cattle  and  other  live  stock  or 
against  loss  by  the  theft  of  any  of  such  property  or  both. 

9.  Against  loss  or  damage  to  automobiles  (except  loss  or  damage 
by  fire,  or  while  being  transported  in  any  conveyance  by  land  or 
water),  including  loss  by  legal  liability  for  damage  to  property 
resulting  f  ronl  the  maintenance  and  use  of  automobiles. 

10.  Against  loss  or  damage  by  water  to  any  goods  or  premises, 
arising  from  the  breakage  or  leakage  of  sprinklers,  pumps  or 
other  apparatus  erected  for  extinguishing  fires,  and  of  water  ])ij)(  >. 
and  against  accidental  injury  to  such  sprinklers,  pumps  or  other 
apparatus,  and  against  damage  from  loss  of  use  or  occupancy  of 
premises  by  reason  of  such  breakage  or  leakage. 

11.  Against  loss  or  damage  to  elevators  or  other  property,  ex- 
cepting loss  or  damage  by  fire,  caused  by  the  maintenance,  opera- 
tion or  use  of  elevators,  and  including  loss  by  legal  liability  for 
damage  to  property;  resulting  from  such  operation,  maintenance 
orjise  of  elevators ;  by  making  and  filing  in  the  office  of  the  super- 

Tntendent  of  msurahce  a  certificate  signed  by  each  of  them,  stating 
their  intention  to  form  a  corporation  for  the  purpose  or  purposes 
named  in  some  one  of  the  foregoing  subdivisions  specifying  the 
subdivisions;  and  setting  forth  a  copy  of  the  charter  which  they 
propose  to  adopt,  which  shall  state  the  name  of  the  proposed  cor- 
poration, the  place  where  it  is  to  be  located,  the  kind  of  insurance 


100  The  Insurance  Law.  §  70. 

to  be  undertaken,  and  under  which  of  the  foregoing  subdivisions 
it  is  authorized,  the  mode  and  manner  in  which  its  corporate 
powers  are  to  be  exercised,  the  manner  of  electing  its  directors  and 
officers,  a  majority  of  whom  shall  be  citizens  and  residents  of  this 
state,  the  time  of  such  elections,  the  manner  of  filling  vacancies, 
the  amount  of  its  capital,  if  any,  and  such  other  particulars  as 
may  be  necessary  to  explain  and  make  manifest  the  objects  and 
purposes  of  the  corporation. 

Such  certificate  shall  be  proved  or  acknowledged  and  recorded 
in  a  book  to  be  kept  for  that  purpose,  and  a  certified  copy  thereof 
delivered  to  the  persons  executing  the  same.  A  mutual  company, 
without  capital  stock,  may  be  organized  for  the  purposes  either 
separately  or  taken  together,  specified  in  the  first  and  second  sub- 
divisions of  this  section.  Except  as  above  provided,  no  such 
corporation  shall  b©  formed  under  tliis  article  for  the  purpose 
of  undertaking  any  other  kind  of  insurance  than  that  specified 
in  some  one  of  the  foregoing  subdivisions,  or  more  kinds  of  insur- 
ance than  are  specified  in  a  single  subdivision;  but  a  corpo- 
ration other  than  a  mutual  corporation  may  be  formed  for  all 
the  purposes  combined,  or  any  two  or  more  of  them,  specified  in 
the  first  and  second  subdivision  and  clause  (a)  of  the  third  sub- 
division, or  for  all  the  purposes  combined,  or  any  two  or  more  of 
them  specified  in  the  second,  third,  fourth,  fifth,  sixth,  seventh, 
eighth,  ninth,  tenth  and  eleventh  subdivisions ;  provided,  however, 
that  policies  under  subdivision  nine  shall  be  issued  only  by  com- 
panies authorized  to  issue  policies  under  subdivisions  two,  three  or 
five,  ^o  corporation  or  association  shall  transact,  in  connection 
with  any  other  kind  of  insurance  mentioned  in  the  foregoing  sub- 
divisions, the  business  of  guaranteeing  and  indemnifying  mer- 
chants, traders  and  those  engaged  in  business  and  giv- 
ing credit  from  loss  and  damage  by  reason  of  giving 
and  extending  credit  to  their  customers  and  those  deal- 
ing with  them,  except  such  corporation  or  association  as 
was  authorized  to  transact  such  business  before  June  first,  nine- 
teen hundred  and  five;  but  such  corporation  or  association  may 
continue  to  transact  such  business  with  all  the  powers  and  privi- 
leges theretofore  possessed  or  enjoyed  by  it.     No  one  policy  issued 


§  70.  LiFE^  Health^  Casualty  Corporations.  101 

by  any  one  corporation  shall  embrace  more  kinds  of  insurance  than 
are  specified  in  one  of  such  subdivisions,  except  that  a  policy  may 
embrace  risks  specified  in  subdivisions  one  and  two,  and  in  sub- 
division two  and  clause  (a)  of  subdivision  three,  and  also  that 
companies  electing  to  issue  policies  under  subdivision  nine  may 
embrace  in  one  policy  risks  under  subdivision  two,  clause  (a)  of 
subdivision  three,  and  subdivisions  ^ve  and  nine,  or  either  of 
them,  and  also  that  companies  electing  to  issue  policies  on  resi- 
dences and  private  apartments  may  embrace  in  one  policy  risks 
under  subdivisions  three,  five,  six,  seven,  ten  and  eleven  of  this 
section,  or  any  or  either  of  them. 

Source.— Former  §  70,  as  amended  by  L.  1895,  chap.  917;  L.  1899,  chap.  693; 
L.  1901,  chap.  634;  L.  1905,  chap.  573;  L.  1906,  chap.  326;  L.  1907,  chap.  206; 
originally  revised  from  L.  1853,  chap.  463,  §  1,  as  amended  by  !•-  1889,  chap. 
338,  and  §§  2,  3,  as  amended  by  L.  1879,  chap.  485;  L.  1869,  chap.  634. 

Amended  by  L.  1909,  chap.  302;  iL.  1910,  chap.  637;  L.  1911,  chap.  324;  L. 
1912,  chaps.  231  and  232;  L.  1913,  chap.  304,  L.  1914,  chap.  204;  and  L.  1915, 
chap.  505.    In  effect  May  3,  1915. 

Note. —  The  primary  purpose  of  the  amendment  of  this  section  by  L.  1915, 
chap.  505  (indemnifying  banks,  bankers,  etc.),  was  to  give  to  authorized 
companies  operating  in  the  State  the  right  to  do  a  class  of  business  which  is 
now  carried  on  almost  exclusively  by  London  Lloyds. —  Ed. 

Note. —  The  purpose  of  the  amendment  of  this  section  by  chapter  204  of 
1914,  was  to  provide  for  the  incorporation  of  companies  to  insure  against  loss 
or  damage  to  elevators  or  other  property,  excepting  loss  or  damage  by  fire, 
caused  by  the  maintenance,  operation  or  use  of  elevators,  and  to  include  loss 
by  legal  liability  for  damage  to  property  resulting  from  such  operation;  and 
against  damage  from  loss  of  use  or  occupancy  of  premises  by  reason  of  the 
breakage  or  leakage  of  sprinklers,  pumps  or  water  pipes;  and  to  provide 
that  companies  electing  to  issue  policies  on  residences  and  private  apart- 
ments may  embrace  in  one  policy  risks  under  subdivisions  three,  five,  six, 
seven,  ten  and  eleven  of  section  seventy,  or  any  or  either  of  them. 

Note.— The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  wa«  to  clarify  the  language  in  relation  to  surety  bonds;  subdividing  the 
previous  provision  relating  to  credit  bonds  by  making  it  a  new  subdivision — 
4-a;  in  subdivision  5  to  give  additional  power  of  insuring  against  forgery 
and  in  subdivision  8  to  correct  error  of  last  year's  legislation  in  relation  to 
livestock  companies. 

'Note. —  Subd.  8  of  this  section  was  amended  by  chap.  231  of  1912  by  adding 
the  words  "  or  against  loss  by  the  theft  of  any  such  property,  or  both."  The 
section  was  amended  by  chap.  232  of  1912  which  amended  the  last  paragraph 
by  adding  "  in  subdivisions  one  and  two,  and  "  but  which  left  subd.  8  as  it 
was  before  passage  of  chap.  231  of  1912.  The  amendment  of  1913  clarifies 
this  situation  brought  about  as  above. — Ed. 

See  §  10,  ante.    Number  of  directors. 

See  §  71,  post.  Deposit  must  be  made  with  superintendent  of  insurance 
before  any  business  is  done. 


102  The  Insurance  Law.  §  70. 

See  §  4,  General  Corporation  Law,  chap.  28  of  1909.  Qualifications  of 
Incorporators. 

See  chap.  733  of  1900.  Reincorporation  of  foreign  moneyed  corporations  in 
this  state. 

NATURE  OF  LIFE  INSURANCE.— Life  insurance  is  not  regarded  as  a 
contract  of  indemnity  merely;  policies  are  governed  by  the  same  principles 
applicable  to  other  agreements  involving  pecuniary  obligations.  St.  John  v. 
Am.  Mut.  L.  Ins.  Co..  13  N.  Y..  39. 

The  relations  between  a  life  insurance  company  and  its  policyholders  are 
those  of  contractors,  the  contract  being  the  policy,  by  which  the  liabilities  of 
the  company  are  to  be  determined.  Mencken  v.  United  States  Life  Ins.  Co., 
11  Daly,  289;  atf'd  98  N.  Y.,  627. 

No  trust  is  created  between  the  stockholders  and  the  insurance  company  or 
its  directors.     Bewley  v.  Equitable  Life  Assur.  Soc,  61  How.  Pr.,  344. 

The  business  of  physicians'  liability  insurance  is  authorized  by  the  laws  ci 
this  state,  provided  that  no  insurance  can  be  written  against  liability  for 
criminal  acts.    Attorney-General  Rep.,  1906,  page  552. 

CONSTRUCTION  OF  POLICY.—  An  insurance  policy  is  to  be  construed  like 
other  contracts  with  the  view  to  arrive  at  the  intent  of  the  parties;  the  rule 
that  an  insurance  policy  shall  be  construed  most  strongly  against  the  insurer, 
can  be  resorted  to  only  when,  after  using  such  helps  as  are  proper  to  arrive 
at  the  intent  of  the  parties,  some  of  the  language  used,  or  some  phrase 
inserted  in  the  policy,  is  of  doubtful  import,  in  which  case  the  rule  should  be 
applied  because  the  insurer  wrote  the  policy.  Foot  v.  Aetna  Life  Ins.  Co., 
61  N.  Y.,  575. 

NAME. —  A  life  insurance  company  is  not  prohibited  from  adopting  a  name 
formerly  used  by  a  tire  insurance  company.  Commercial  Union  Assur.  Co.  v. 
Smith,  2  N.  Y.  Supp.,  296;  18  St.  Rep.,  151. 

CHARTER. —  The  charter  of  a  proposed  insurance  company  should  state 
specifically  the  casualty  against  which  insurance  is  contemplated,  else  the 
superintendent  of  insurance  is  justified  in  refusing  his  certificate  thereto. 
Attorney -General  Rep.,  1894,  page  357. 

A  certificate  of  incorporation  must  set  forth  the  time  when  the  directors  and 
officers  of  a  company  are  to  be  elected;  a  statement  in  the  charter  of  such  pro- 
posed corporation  that  the  annual  meeting  of  the  stockholders  shall  be  held 
on  a  date  in  January  to  be  fixed  by  the  by-laws  is  not  sufficient.  Attorney- 
General  Rep.,  May  26,  1911. 

UNAUTHORIZED  CORPORATIOJN^.- r^othing  can  lawfully  become  the 
subject  of  casualty  insurance  unless  specified  in  one  of  the  subdivisions  of 
section  70  of  the  Insurance  Law.    Attorney-General  Rep.,  1893,  page  89. 

Insurance  against  loss  from  imperfect  sanitary  conditions  is  not  within  the 
purview  of  the  Insurance  Law.    Attorney -General  Rep.,  1893,  page  335. 

A  corporation,  organized  for  the  purpose  of  guaranteeing  payment  of  losses 
under  insurance  policies,  cannot  do  business  under  the  Insurance  Law.  It. 
seems  that  such  corporations  are  prohibited  from  operating  under  the  Business 
Corporation  Law.    Attorney-General  Rep.,  1894,  page  65. 

A  corporation  should  not  be  invested  with  the  power  of  doing  both  savings, 
loan  and  insurance  business.  In  re  United  Security  Life  Insurance  and  Trust 
Company,  Attorney-General  Rep.,  1896,  page  153. 


§  70.  LiFE^  Health^  Casualty  Corporations.  103 

An  insurance  company  and  a  savings  and  loan  company  cannot  issue  a  joint 
certificate  to  a  proposed  policyholder.    Attorney-General  Rep.,  1893,  page  259. 

A  company  organized  to  provide  medical  attendance,  in  case  of  sickness  to 
one  for  a  premium  paid,  and  to  furnish  a  coffin  in  case  of  death,  cannot  do 
business  under  the  provisions  of  the  Business  Corporation  Law,  but  may  under 
the  Insurance  Law.  In  re  U.  &  M.  Supply  Co.,  Attorney-General  Rep.,  1895, 
page  217. 

An  insurance  company  cannot  be  incorporated  to  carry  on  the  business 
specified  in  subdivision  4  of  section  70  of  the  Insurance  Law,  in  addition  to 
the  business  specified  in  article  V.     Attorney-General  Rep.,  1897,  page  230. 

The  kind  of  insurance  under  section  170,  subd.  2,  and  section  70,  subd.  4, 
dillers  in  several  material  particulars  and  companies  cannot  be  organized  in 
tliis  State  for  the  purpose  of  combining  the  same,  and  while  the  superintendent 
is  not  required  to  interpret  the  law  in  other  states,  he  should  not  sanction 
additional  kind  of  insurance  from  that  already  .permitted  to  a  company  in 
this  State.    Attorney-General  Rep.,  Mar.  12,  1897,  Aug.  3,  1897. 

SURETY  COMPANIES. —  Surety  companies  have  a  legal  right  to  insure 
the  payment  of  deposits  in  banks.    Attorney-General  Rep.,  1893,  page  266. 

A  corporation  organized  under  section  70,  subdivision  4,  may  insure  entire 
risks  of  a  foreign  surety  company.     Attorney-General  Rep.,  1896,  page  145. 

FOREIGN  COMPANY. —  An  insurance  company  of  a  sister  state  doing 
ousiness  here  under  a  special  statute  applicable  thereto  has  no  greater  rights 
than  those  conferred  by  the  statute  in  question.  Attorney-General  Rep.,  1892, 
page  392. 

A  foreign  casualty  insurance  company  may  be  authorized  to  transact  four 
kinds  of  casualty  insurance  business  in  this  state  on  deposit  of  $250,000, 
although  its  charter  authorizes  it  to  do  all  kinds  of  casualty  insurance 
Attorney-General  Rep.,  1893,  page  249. 

DEPOSIT. —  An  insurance  company,  organized  under  the  laws  of  another 
state  of  the  United  States,  for  the  transaction  of  business  specified  in  section 
70  of  the  Insurance  Law,  must  make  the  same  deposit  of  securities  that  is 
required  from  a  domestic  company.     Attorney-General  Rep.,  1897,  page  169. 

A  foreign  company  must  deposit  in  home  state  $100,000  for  each  kind  of 
insurance  which  it  is  organized  to  transact  under  §  70,  or  $250,000  if  for 
three  or  more  kinds.    In  re  General  I.  Co.,  Attorney-General  Rep.,  Jan.  8,  1906. 

The  superintendent  of  insurance  may  return  to  the  depositors  the  securities 
which  were  deposited  as  a  condition  precedent  to  insurance  business  where 
the  corporation  determined  not  to  start  in  business  and  there  were  no  liabilities 
against  said  corporation.  In  re  People's  Life  Insurance  Company,  Attorney- 
General  Rep.,  1896,  page  133. 

REINSURANCE. —  An  insurance  company  is  not  entitled  to  a  deduction  on 
account  of  reinsurance  made  by  it  in  Lloyds  which  is  not  amenable  and  has 
not  paid  the  tax  provided  for  by  section  34.  In  re  Standard  Marine  Insurance 
Company,  Attorney-General  Rep.,  1896,  page  151. 

DECLARATION. —  In  a  declaration  presented  to  the  superintendent  of 
insurance  by  persons  applying  for  incorporation  as  a  casualty  insurance 
company,  the  business  proposed  to  be  carried  on  was  stated,  among  other 
things,  to  be  "  the  inspection  and  certification  as  to  the  sanitary  conditions 


104  The  Insurance  Law.  §  '^1. 

of  buildings  and  premises."  In  pursuance  of  the  requirements  of  the 
Insurance  Law,  under  section  70,  the  superintendent  submitted  the  declaration 
and  charter  to  the  attorney-general  for  certification.  That  officer  refused  to 
certify.  In  proceedings  by  mandamus  to  compel  the  certification,  held,  that 
the  business  so  stated  in  the  declaration  was  not  insurance  in  any  legal 
sense,  but  an  entirely  different  kind  of  business  not  within  the  purview  of 
the  Insurance  Law,  and  so  the  declaration  was  not  entitled  to  be  tiled  in  the 
office  of  the  superintendent,  and  the  attorney -general  properly  refused  to 
attach  his  certificate  of  approval  thereto.  People  ex  rel.  Woodward  v.  Kosen- 
dale,  142  N.  Y.,  126;  aff'g  76  Hun,  103. 

BONDS. — A  domestic  insurance  corporation  organized  under  subdivision  4 
of  section  70  of  the  Insurance  Law,  can  issue  bonds  and  undertakings  for  bail 
in  proceedings  of  a  criminal  nature.     Attorney-General  Kep.,  1901,  page  257. 

QUORUM. — A  quorum  of  directors  must  be  a  majority  of  all  the  directors 
unless  otherwise  provided  in  charter  or  other  law;  by-laws  cannot  change 
this  rule.  Boards  of  directors  of  insurance  companies  are  subject  to  the  pro- 
visions of  section  34  of  the  General  Corporation  Law.  Matter  of  New  Amster- 
dam Casualty  Company,  Attorney-General  Kep.,  1900,  page  253. 

GLA&S  BREAKAGE. —  A  company  may  not  extend  its  liability  upon  glass 
against  breakage  under  subdivision  6  to  include  property  injured  by  such 
breakage.    Attorney -General  Rep.,  Oct.   15,  1903. 

A  business  corporation  engaged  in  replacing  broken  glass,  although  no 
money  indemnity  is  promised  in  the  contract,  is  doing  an  insurance  business. 
Attorney-General  Rep.,  1914.     Page  86. 

INSURING  PROPERTY  OF  ANOTHER.— Insurance  companies  cannot  in- 
sure a  person  against  loss  or  damage  resulting  from  accident  to  the  property 
as  well  as  to  the  person  of  another  for  which  the  person  insured  is  liable. 
Attorney-General's  Rep.,  July  9,  1909. 

BENEFICIARY. —  The  beneficiary  under  a  policy  issued  by  a  casualty  com- 
pany, doing  business  under  article  2  of  the  Insurance  Law,  and  which  contains 
no  provision  permitting  the  insured  to  change  the  beneficiary  named,  has  a 
vested  interest  in  the  policy  and  not  a  mere  expectancy  or  inchoate  right. 
Dunn  V.  Amsterdam  Casualty  Co.,  67  Misc.,  109. 

CONTINUOUS  POLICY.— In  a  "continuous  policy"  of  accident  insurance 
a  clause  providing  against  the  payment  of  benefits  "  for  illness  or  death 
occurring  before  the  policy  has  been  in  force  two  months  "  applies  only  to  the 
first  two  months  following  the  issuance  of  the  policy.  Turner  v.  New  York 
Safety  Reserve  Fund,  158  App.  Div.,  835. 

§  71.    Completion  of  organization. 

Upon  receipt  of  the  certified  copy  of  the  certificate  of  incor- 
poration from  the  superintendent,  the  persons  signing  such  certifi- 
cate shall  publish  notice  of  their  intention  to  form  such  corporation 
in  a  paper  designated  by  the  superintendent  for  six  successive 
weeks,  upon  expiration  of  whidi  time  they  may  open  books  to 
receive  subscriptions  if  a  stock  corporation,  to  the  ca])ital  stock, 


§  71.  LiFE^  Health^  Casualty  Coeporations.  105 

or  if  a  mutual  corporation,  for  life  insurance,  and  keep  them 
open  until  the  whole  of  such  stock  or  the  minimum  amount  of 
life  insurance  has  been  subscribed  for  and  collect  such  subscrip- 
tions to  the  capital  stock  or  the  annual  premiums  payable  upon 
such  insurance;  and  may  invest  such  capital  or  moneys  in  tJie 
manner  prescribed  in  this  chaptei\,.^  ' 

'No  such  corporation  shall  transact  any  business  of  insurance 
until,  if  a  stock  corporation,  the  capital  has  been  fully  paid  in 
in  cash,  or,  if  a  mutual  corporation,  at  least  five  hundred  persons 
have  subscribed  in  the  aggregate  for  at  least  one  million  dollars 
of  insurance  upon  tlieir  lives  and  shall  each  have  paid  in  one  full 
annual  premium  in  cash  upon  the  insurance  subscribed  for,  nor 
in  either  case  until  it  shall  have  deposited  with  the  superintendent 
of  insurance  one  hundred  thousand  dollars  in  the  securities 
required  by  law.  If  organized  for  purposes  mentioned  in  two  or 
more  of  the  subdivisions  of  section  seventy,  it  shall  deposit  with 
the  superintendent  the  same  amount  in  securities  in  the  aggregate 
not  exceeding  two  hundred  and  fifty  thousand  dollars,  as  if 
cor|X)rations  had  been  separately  formed  for  such  purposes. 

The  securities  deposited  pursuant  to  this  section  shall  be  held 
by  the  superintendent  in  trust  for  the  benefit  and  protection  of 
and  as  security  for  the  policy  holders  of  the  corporation. 

A  mutual  corporation  may  borrow  or  assume  liability  for  the 
repayment  of  a  sum  of  money  sufficient  to  defray  the  reasonable 
expenses  of  its  organization  and  to  provide  the  amount  to  be 
deposited  with  the  superintendent  as  aforesaid  upon  an  agreement 
that  the  same  witli  interest  at  a  rate  not  exceeding  eight  per 
centum  per  annum  shall  be  repaid  only  in  the  event  that  after 
such  repayment  with  interest  the  corporation  shall  be  left  ]X)ssessed 
of  sufficient  assets  to  meet  all  its  liabilities  and  to  maintain  a  full 
legal  reserve  against  its  policies  and  not  until  said  reserve  shall 
be  equal  to  at  least  one  hundred  thousand  dollars ;  and  such  agref^ 
ment  shall  provide  that  the  corporation  shall  have  the  option  to 
make  such  repayment  whenever  it  shall  be  able  to  do  so  in 
accordance  with  the  aforesaid  conditions. 

Source.— Former  §  71,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1851,  chap.  95,  §  1;  L.  1853,  chap.  463,  §  5,  and  §  6,  as  amended  by  L. 
1881,  chap.  560;  L.  1865,  chap.  328,  §  2;  L.  1877,  chap.  439,  §  1,  as  amended  by 
L.  1881,  chap.  628. 

See  §  13,  ante.    Deposit  of  securities. 

See  §  16,  ante.    Investment  of  capital  and  surplus. 

See  8  17,  ante.     Securities  must  be  interest  or  dividend  paying. 


106  The  Insurance  Law.  §  11. 

See  §  18,  ante.    Stocks  in  other  corporations. 

See  §  26,  ante.    Deposits  by  insurance  corporations  of  other  states. 

See  §  50  et  seq.,  ante.  Stock  Corporation  Law,  chap.  61  of  1909,  as  to  issue 
and  transfer  of  stock. 

An  insurance  company  of  a  sister  state,  doing  business  here  under  a  special 
statute  applicable  thereto,  has  no  greater  rights  than  those  conferred  by  the 
statute  in  question.    Attorney -General  Rep.,  1892,  page  392. 

DEPOSIT. —  The  securities  deposited  by  a  foreign  insurance  company  with 
the  insurance  department  are  to  be  held  for  the  benefit  of  those  policyholders 
insured  in  the  same  class  or  classes  of  insurance  which  the  company  is  author- 
ized to  write  in  this  state.     Attorney-General  Rep.,  1892,  page  389. 

A  foreign  company  must  deposit  in  home  state  $100,000  for  each  kind  of 
insurance  which  it  is  organized  to  transact  under  §  70,  or  $250,000  if  for 
three  or  more  kinds.    In  re  General  I.  Co.,  Attorney-General  Rep.,  Jan.  8,  1906. 

AH  deposits  by  a  surety  company  with  the  superintendent  constitute  a 
single  fund  Avhich  is  im.pressed  with  a  trust  for  the  benefit  of  all  policy- 
holders of  the  depositing  corporation,  and  a  surety  company  doing  business 
under  two  subds.  of  §  70  may  not,  by  amending  its  charter  so  as  to  restrict 
its  business  to  one  subdivision  only,  withdraw  a  portion  of  such  deposit. 
Attorney-General  Rep.,  Aug.  14,  1908. 

Section  71  only  requires  that  the  superintendent  of  insurance  shall  compel 
life  insurance  companies  to  keep  on  deposit  with  him  securities  to  the  value 
of  $100,000.    Raymond  v.  Sec.  Trust  &  life  Ins.  Co.,  Ill  App.  Div.,  191. 

A  foreign  life  insurance  company  may  be  admitted  to  do  business  in  this 
state  on  making  the  deposit  of  $200,000  required  by  section  27  of  the  Insurance 
Law,  although  the  entire  capital  stock  of  such  company  is  not  paid  up 
Attorney-General  Rep.,  1893,  page  280. 

Only  securities  to  the  extent  of  the  amount  specified  in  the  statute  are  to 
be  held  by  the  superintendent  of  insurance  in  trust  for  the  benefit  of  policy- 
holders.   Attorney-General's  Rep.,  July  1,  1909. 

AMENDMENTS  TO  CHARTER.— Amendments  to  charter  of  an  insurance 
company,  which  do  not  enlarge  its  franchises,  do  not  render  necessary  a  repub- 
lication of  the  notice  of  intention  to  organize. 

An  insurance  company  whose  charter  and  declaration  were  filed  and 
approved,  but  which  was  not  organized  under  the  former  law,  may  be  organ- 
ized under  the  present  Insurance  Law  without  republication  of  notice.  Attor- 
ney-General Rep.,  1892,  page  394. 

REDUCTION  OF  STOCK.— Capital  stock  may  be  reduced  without  payment 
of  the  full  amount  of  stock  named  in  original  certificate,  and  the  filing  of  said 
certificate  of  reduction  of  stock  and  the  endorsement  thereon  of  the  superin- 
tendent of  insurance  operates  as  an  amendment  to  the  original  certificate. 
Attorney-General  Rep.,  1903,  page  249. 

All  deposits  made  by  a  surety  company  with  the  Superintendent  of  Insur- 
ance constitute  a  single  fund,  which  is  impressed  with  the  trust  for  the  benefit 
of  all  the  policyholders  of  the  depositing  corporation.  The  words  "  as  if  cor- 
porations had  been  separately  formed  for  such  purposes,"  as  used  in  §  71,  do 
not  change  this  proposition,  as  such  words  are  used  merely  to  determine  the 
aggregate  amount  of  the  deposit  required.     Attorney-General  Opinion,  August 

14,  aoos. 


§  72.  Life,  Health,  Casualty  Corporations.  10 Y 

§  72.  Withdrawal  of  securities  upon  relinquishment  of 
business. 

When  any  such  corporation  shall  desire  to  relinquish  its  busi- 
ness, the  superintendent  shall,  on  the  application  of  such  corpora 
tion  under  the  oath  of  its  president  or  principal  officer  and  secretary 
or  actuary  give  notice  of  such  intention  in  a  paper  at  Albany  in 
which  notices  by  state  officers  are  required  by  law  to  be  published 
at  least  twice  a  week  for  six  months.  After  such  publication,  he 
shall  deliver  up  to  such  corporation  the  securities  held  by  him 
belonging  to  it,  upon  being  satisfied  by  an  exhibition  of  tlie  books 
and  papers  of  such  corporation  and  on  examination  made  by  him- 
self or  by  some  competent  person  to  be  appointed  examiner  by 
him,  and  upon  the  oath  of  the  president  or  principal  officer  and 
the  secretary  or  actuary  of  such  corporation  that  all  its  debts  and 
liabilities  of  every  kind  are  paid  and  extinguished  that  are  due 
or  may  become  due,  upon  any  contract  or  agreement  made  within 
the  United  States. 

The  superintendent  may  also,  from  time  to  time,  deliver  up  to 
such  corporation,  or  its  assignees,  any  portion  of  such  securities 
on  being  satisfied,  in  the  manner  and  form  hereinbefore  required, 
or  upon  any  other  competent  proof,  that  all  the  debts  and  liabili- 
ties of  every  kind  that  are  due,  or  may  become  due,  within  the 
United  States  are  less  than  the  amount  of  the  portion  of  such 
securities  he  shall  still  retain. 

Any  foreign  life  insurance  corporation  desiring  to  discontinue 
business  in  this  country  and  having  made  the  publication  hereinbe- 
fore required,  may,  in  the  discretion  of  the  superintendent  of  insur- 
ance withdraw  one-half  of  its  deposits  on  registering,  according 
to  the  provisions  of  law  for  the  registry  of  policies,  all  its  out- 
standing policies  issued  to  citizens  or  residents  of  the  United 
States,  and  covenanting  to  maintain  unimpaired  the  reinsurance 
deposit  for  such  registered  policies  for  all  future  time,  and  spe- 
cially pledging  for  their  security  all  future  premiums  payable  on 
American  policies. 

Source. — ^Former  §  72;  originally  revised  from  L.  1861,  cihap.  95,  §  8;  L.  1853, 
chap.  463,  §  19,  as  amended  by  L.  1869,  chap.  829. 

EXCESS  DEPOSITS.— Excess  deposits  should  not  be  withdrawn  "  until  all 
tbe  conditions  of  the  trust  have  been  complied  with."  Attorney-General 
Rep.,  1903,  page  476. 


108  The  Insurance  Law.  §  73. 

Excess  deposits,  form  of  delivery  of,  to  surety  companies  by  superintendent 
of  insurance.    Attorney-General  Rep.,  1903,  page  489. 

RETURN  OF  SECURITIES.— The  superintendent  of  insurance  may  return 
to  the  depositors  the  securities  which  were  deposited  as  a  condition  precedent 
to  insurance  business  where  the  corporation  determined  not  to  start  in  busi- 
ness and  there  were  no  liabilities  aprainst  said  corporation.  In  re  People's  Life 
Insurance  Company,  Attorney-General  Rep.,  1896,  page  133. 

Superintendent  of  insurance  should  not  surrender  the  securities  on  deposit 
in  insurance  department  for  the  benefit  of  policyholders  in  the  United  States. 
In  re  Baloise  Fire  Ins.  Co.,  Attorney- General  Rep.,  1903,  page  424. 

Insurance  companies  retiring  from  business  may  withdraw  from  deposit 
with  the  superintendent  of  insurance  all  securities  in  exceess  of  an  amount 
suflBcient  to  secure  policyholders  in  the  United  States.  Such  deposits  are 
held  in  trust  for  all  such  policyholders.    Attorney-General  Rep.,  1893,  page  216. 

The  provisions  of  §  72,  relating  to  the  withdrawal  of  securities  deposited, 
apply  only  to  such  corporations  as  shall  desire  to  relinquish  all  business  in 
this  state.  The  Superintendent  of  Insurance  holds  the  securities  as  trustee 
for  the  policyholders  and  he  should  not  surrender  f»ny  part  of  such  deposit 
except  by  express  direction  either  of  the  legislature  oi  the  court.  Attorney - 
General's  Opinion,  August  14,  1908. 

§  73.  Special  deposits  to  secure  rcrii  ter^a  policies  and 
annuity  bonds. 

Any  domestic  life  insurance  corporation  may  depot  it  'vvitli  tlio 
superintendent  of  insurance  securities  of  the  kinds  and  in  adiiitinn 
to  the  amount  now  required  and  authorized  by  law  to  be  deposited 
with  him,  to  any  amount  not  less  than  twenty-five  thousand  dollars, 
which  shall  be  legally  transferred  by  it  to  the  superintendent  for 
the  common  benefit  of  all  the  holders  of  its  registered  policies  and 
annuity  bonds  issued  under  the  provisions  of  this  article,  and  he 
shall  hold  the  same  in  trust  for  the  purposes  and  objects  specified 
in  this  article;  provided  that  no  policies  shall  be  registered  or 
annuity  bonds  issued  under  the  provisions  of  this  section  after  the 
thirty-first  day  of  December,  nineteen  hundred  and  ten. 

Such  securities  shall  not  be  alienated  from  tlie  purposes  of  such 
trust,  nor  transferred  except  in  the  manner  provided  in  this  article, 
and  such  transfer  must  be  made  by  the  superintendent  under  his 
seal  of  oifice  upon  the  written  application,  under  its  corporate  seal, 
of  the  corporation  making  the  deposit,  or  of  the  receiver  of  such 
corporation,  and  in  compliance  with  the  laws  of  the  state  relating 
to  such  transfers.     When  such  securities  shall  have  been  legally 


§  74.  LiFE^  Health,  Casualty  Corporations.  109 

transferred  to  the  superintendent,  he  shall  issue  to  such  corpora- 
tion registered  policies  of  insurance  or  annuity  bonds  of  such 
denominations  or  amounts  as  the  corporation  may  require.  Such 
policies  or  bonds  shall  bear  upon  the  face  tliereof  the  words  ''  the 
resen^e  on  this  policy  (or  bond)  is  secured  by  pledge  of  public 
stock  or  bonds  and  securities  "  with  the  seal  of  the  department, 
and  shall  be  countersigned  by  the  superintendent  or  his  authorized 
deputy. 

The  corporation  shall  be  cliarged  by  the  superintendent  upon 
the  delivery  of  such  policies  or  bonds  with  the  amounts  of  the  net 
value  tliereof  at  the  end  of  the  policy  year,  valued  according  to 
the  provisions  of  section  eighty-four  of  this  chapter,  making  proper 
allowances  for  semi-annual,  quarterly  or  montlily  premiums,  bui 
in  no  case  shall  the  amount  of  securities  deposited  under  the 
provisions  of  this  section  be  less  than  the  amount  of  such  aggregate 
values. 

Source. — Former  §  73,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1869,  chap.  902,  §§  2-4. 

Amended  by  L.  1910,  chap.  697. 

See  §  13  et  seq.,  ante.    Deposit  of  securities. 

CONSTITUTIONAL. —  An  act  authorizing  deposit  with  superintendent  is  not 
unconstitutional  under  article  8,  section  1,  New  York  State  Constitution. 
Attorney-General  v.  North  Amer.  L.  Ins.  Co.,  82  N.  Y.,  172. 

COMMISSIONS. —  The  proceeds  of  the  securities  deposited  with  the  super- 
intendent are  assets  in  the  hands  of  the  receiver,  and  he  is  entitled  to  com- 
missions thereon.    Attorney-General  v.  North  Am.  Life  Ins.  Co.,  89  N.  Y.,  94. 

RECEIVER.— Under  the  provisions  of  chapter  902  of  1869,  relative  to 
deposits  with  the  superintendent  of  insurance,  it  was  held  that  it  was  the  duty 
of  the  superintendent,  where  a  receiver  of  such  a  company  has  been  appointed, 
to  convert  the  securities  deposited  with  him  into  cash  and  pay  over  to  the 
receiver  the  proceeds,  to  be  applied  by  such  receiver  in  payment  of  registered 
policies  and  annuities.  Attorney-General  v.  North  Am.  Life  Ins.  Co.,  85  N.  Y., 
485. 

§  74.  Annual  report  of  corporation  of  registered  policies  and 
annuity  bonds. 

Every  such  corporation  shall  annually  on  July  first  or  within 
sixty  days  thereafter  report  to  the  superintendent  of  insurance 
under  the  oath  of  the  president  and  actuary  the  exact  condition 
of  the  registered  policies  received  from  the  superintendent  and 
of  the  premimn  account  of  such  policies,  and  shall  deposit  with 
the  superintendent  additional  securities  of  the  kind  in  which  the 


I 


110  The  Insueaitce  Law.  §  74. 

minimum  amount  of  cash  capital  of  domestic  insurance  corpora- 
tions is  required  to  be  invested  by  the  provisions  of  section  sixteen 
of  article  one  of  this  chapter,  to  an  amount  equal  to  any  increase 
in  value  of  the  policies  heretofore  issued  and  which  shall  rem,ain  in 
force,  valued  by  the  same  rule  as  upon  the  issue  thereof.  No 
one  bond  or  mortg^age  so  deposited  shall  be  for  a  less  sum  than  five 
thousand  dollars.  The  securities  thus  from  time  to  time  depos- 
ited, or  so  large  an  amount  thereof  as  may  be  necessary  to  equal 
at  all  times,  the  net  value  of  all  the  outstanding  registered  policies 
and  annuity  bonds  of  such  corporation,  shall  be  held  by  the  super- 
intendent in  trust,  as  provided  in  the  preceding  section,  until  the 
obligations  of  such  corporation  under  such  registered  policies  and 
annuity  bonds,  shall,  to  the  satisfaction  of  the  superintendent,  b«^ 
fully  liquidated,  canceled  and  annulled. 

The  state  shall  not  be  deemed  to  have  incurred  any  obligation 
to  pay  tlie  policies  and  annuity  bonds  so  issued,  beyond  the  proper 
application  of  the  securities  so  deposited  towards  their  liquidation, 
as  in  this  article  provided. 

The  treasurer  of  the  state,  and  any  person  duly  autJiorized  by 
the  depositing  or  reinsuring  corporation,  shall,  at  all  times,  in  the 
usual  office  hours,  have  access  to  the  books  and  other  documents 
in  the  insurance  department  relating  to  the  deposits  made,  and 
policies  and  annuity  bonds  issued,  under  the  provisions  of  thie 
article,  and  to  such  securities  as  may  be  necessary  for  the 
examination  thereof. 

The  treasurer  shall  for  the  services  required  by  this  chapter 
receive  an  annual  salary  of  two  hundred  and  fifty  dollars  to  bo 
paid  by  the  corporations  availing  themselves  of  tbe  provisions  of 
this  and  the  preceding  section. 

Any  such  depositing  corporation  may  at  any  time  withdraw  any 
excess  of  securities  above  the  net  present  value  hereinbefore  speci- 
fied, upon  satisfying  the  superintendent  by  written  proof  to  be  filed 
in  the  department  that  such  excess  exists,  and  shall  be  allowed  to 
receive  the  interest  on  all  securities  deposited  and  to  exchange  such 
securities  by  substituting  other  securities  of  the  kind  in  wliich  tlio 
minimum  amount  of  cash  capital  of  domestic  insurance  corpora- 
tions is  required  to  be  invested  by  the  provisions  of  section  sixteen 
of  article  one  of  this  chapter. 
Source. — Former  §  74;  originally  revised  from  L.  1869,  chap.  902,  §§  4-6. 


§§  75,  76.      LiFE^  Health^  Casualty  Corporations.  Ill 

Amended  by  L.  1911,  chap.  325. 

See  §  297,  Penal  Law.    Misconduct  of  officers  as  to  report. 
See  §  665,  Penal  Law.     Misconduct  of  officers  and  employees  as  to  written 
statement  or  report. 

§  75.    Registration  of  policies  and  annuity  bonds. 

Such  corporation  shall  deliver  to  the  superintendent  of  insurance 
the  policy  and  annuity  bonds  engraved  and  printed  or  printed  and 
written  in  such  manner  as  tlie  superintendent  shall  direct,  Avith 
duplicate  originals  of  the  same  duly  signed.  On  their  receipt  by 
the  superintendent  he  shall  cause  them  to  be  duly  registered  in 
proper  books  kept  for  that  purpose,  in  consecutive  numbers,  corre- 
sponding to  the  numbers  on  such  policies  and  bonds,  and  shall 
cause  his  name  or  the  name  of  his  deputy  to  be  inscribed  on  the 
policies  and  bonds  and  affix  the  seal  of  the  department  to  the  same, 
and  shall  return  tlie  original  policies  to  the  depositing  corporation. 
The  expenses  necessarily  incun-ed  in  registering,  countersigning 
and  sealing  such  policies  and  annuity  bonds,  and  in  otherwise 
executing  the  provisions  of  this  article,  including  the  salary  of  the 
treasurer,  shall  be  audited  and  paid  out  of  any  moneys  in  the 
treasur}^  not  otherwise  appropriated.  For  the  purpose  of  reim- 
bursing the  same  the  superintendent  shall  charge  against  the  depos- 
iting corporations  respectively  an  amount  sufficient  for  such  pur- 
poses as  may  be  just  and  reasonable.  The  superintendent  shall 
receive  mutilated  policies  and  annuity  bonds  issued  to  any  such 
corporation  and  deliver  in  lieu  thereof  other  policies  and  bonds 
of  like  tenor  and  date,  and,  in  case  of  lost  policies  or  bonds,  furnish 
certified  copies  of  the  duplicates  on  file  in  his  office. 

Source. — Former  §  75;  originally  revised  from  L.  1869,  diap.  902,  §  6. 

§  76.    When  depositing  corporation  to  be  deemed  insolvent. 

If  at  any  time  tlie  affairs  of  any  such  depositing  corporation 
shall,  in  the  opinion  of  the  superintendent  of  insurance,  appear 
to  be  in  such  a  condition  as  to  render  the  issuing  of  additional 
policies  and  annuity  bonds  by  the  corporation  injurious  to  the 
public  interests,  such  corporation  shall  be  deemed  insolvent  and 
tbe  superintendent  shall  report  tbe  fact  to  the  attorney-general, 
who  shall  bring  such  action  or  institute  such  proceedings  as  may 
be  authorized  by  law  to  be  taken  against  an  insolvent  insurance 


112  The  Insurance  Law.  §  76. 

corporation.     If  in  any  such  action  or  proceeding  it  shall  appear 

to  the  satisfaction  of  the  court  that  the  assets  and  funds  of  the 

corporation  are  not  sufficient  to  justify  its  further  continuance  of 

the  business  of  insuring  lives,  granting  annuities  and  incurring 

new  obligations  as  authorized  by  its  charter,  it  shall  enjoin  and 

restrain  the  corporation  from  the  further  transaction  of  its  business 

and  appoint  a  receiver  of  its  assets  and  credits,  who,  upon  filing 

his  bond  to  the  people  of  the  state  in  an  amount  and  with  sureties 

approved  by  the  court,  conditioned  for  the  faithful  performance 

of  his  duties,  shall  take  possession  of  all  such  assets  and  credits. 

including  the  securities  deposited  in  the  insurance  department. 

Source. — Former  §  76;  originally  revised  from  L.  1869,  ciiap.  902,  §  7. 

See  §  297,  Penal  Law.  When  insolvency  of  a  monied  corporation  is  deemed 
fraudulent. 

RECErVEK. —  Where  the  company  has  been  declared  to  be  insolvent  and 
its  affairs  put  into  the  hands  of  a  receiver,  judicial  action  thereafter  must 
follow  the  statute;  where  the  actuary's  report  shows  that  the  company  is  not 
able  to  go  on  with  its  business,  the  assets  must  be  turned  into  money, 
liabilities  paid,  and  the  corporate  affairs  closed  up;  the  Supreme  Court  cannot 
order  the  receiver  to  call  for  premiums  and  keep  up  the  business  of  the 
company,  nor  can  it  discharge  the  receiver  and  give  back  the  property  to  the 
corporation.    Attorney -General  v.  At.  Mut.  Ins.  Co.,  77  N.  Y.,  336. 

SUFFICIENT  CAUSE.— Where  it  appeared  by  the  proofs  that  the  assets 
of  the  company  were  less  than  the  amount  of  the  values  of  the  outstanding 
policies  by  about  one-tenth  of  that  amount;  that  the  capital  stock  was 
entirely  sunk;  that  the  assets  were  of  a  kind  not  readily  convertible  or  avail- 
able; that  a  large  share  of  the  assets  had  been  kept  as  a  cash  deposit  with  a 
private  banker,  who  was  an  oflficer  of  the  company,  without  any  agreement 
as  to  interest  and  without  security  as  to  loss;  that  the  trustees  were  not  in 
the  practice  of  holding  regular  meetings,  or  of  supervising  the  affairs  of  the 
company;  that  the  dividends  were  paid  without  a  regular  meeting  or  a  vote 
of  the  board  of  trustees,  when  there  had  been  losses  and  a  depreciation  in  the 
value  of  the  assets,  and  when  it  was  impossible  to  know  whether  or  not  the 
capital  had  been  impaired,  held  that  there  was  sufficient  cause  for  interference. 
People  V.  Atlantic  Mut.  Ins.  Co.,  74  N.  Y.,  177;  aff'g  53  How.  Pr.  300. 

The  Supreme  Court  has  no  power  to  review  the  preliminary  action  of  the 
superintendent  in  making  his  report;  if  an  error  has  been  committed  or  mis- 
take made  by  the  superintendent,  the  hearing,  and  that  alone,  will  remedy  it; 
but  it  must  be  proved  to  the  satisfaction  of  the  court,  upon  the  investigation, 
that  there  is  danger  to  the  public  interests  by  the  continuance  of  the  business 
of  the  company,  before  it  would  be  warranted  in  making  the  final  order, 
arresting  future  operations  and  appointing  a  receiver.  Attorney-General  v. 
At.  Mut.  Ins.  Co.,  53  How.  Pr.,  227. 

TITLE  OF  RECEIVER. —  Assets  means  all  the  property,  real  and  personal, 
of  the  company^  and  the  receiver,  upon  his  appointment,  becomes  vested  with 
the  title  to  all  the  property  of  the  company,  including  its  real  estate,  and  no 


§  76.  LiFE^  Health,  Casualty  Corporations.  113 

formal  conveyance  to  him  thereof  is  requisite.    Matter  of  Attorney-General  v. 
Ins.  Co.,  100  N.  Y.,  279. 

A  decree  dissolving  a  company  and  appointing  a  receiver  vests  in  the  receiver 
all  the  property  of  the  company;  a  receiver  may  maintain  an  action  to  set 
aside  fraudulent  transfers  of  property  by  the  company;  the  Supreme  Court, 
having  acquired  jurisdiction  of  proceedings  for  winding  up  a  corporation,  and 
having  appointed  a  receiver,  has  jurisdiction  to  stay  the  suit  of  a  creditor 
brought  to  recover  assets  to  which  the  creditor  is  entitled,  in  whatever  court 
such  suit  may  be  pending.  Attorney-General  v.  Guard.  Mut.  L.  Ins.  Ca,  77 
N.  Y.,  272;  rev'g  15  Hun,  18. 

Where  a  receiver  has  been  appointed  of  a  registered  policy  life  insurance 
company,  and  the  superintendent  has  sold  the  securities  deposited  with  him 
to  secure  such  policies,  the  receiver  is  entitled  to  have  the  proceeds  immedi 
ately  paid  over  to  him;  the  superintendent  has  no  right  to  retain  the  fund 
until  the  receiver  is  ready  to  distribute  it.  Matter  of  Attorney-General  v. 
North  Am.  Ins.  Co.,  80  N.  Y.,  152. 

The  provision  of  this  section  which  empowers  receivers  to  take  possession 
of  the  assets  of  the  company,  including  the  securities  deposited  in  the  state 
insurance  department,  refers  only  to  companies  issuing  registered  policies  and 
annuity  bonds.    People  v.  Insurance  Co.,  147  N.  Y.,  25. 

STAY  OF  PROCEEDINGS.— The  statute  does  not  authorize  the  court  to 
stay  proceedings  by  creditors,  pending  an  application  to  wind  up  the  affairs  ol 
the  company.     Whritner  v.  Universal  Ins.  Co.,  4  Abb.  N.  C,  23. 

OTHER  ACTIONS.— The  fact  that  the  affairs  of  a  life  insurance  company 
are  being  wound  up  and  adjusted  in  proceedings  under  the  care  of  a  receiver, 
will  not  prevent  the  court  from  entertaining  an  equitable  action  to  ascertain 
and  enforce  the  rights  of  policyholders  in  the  company,  either  on  the  ground 
that  there  is  a  conflict  of  jurisdiction  nor  on  the  ground  that  a  multitude  of 
suits  may  be  brought.     Bedell  v.  North  Am.  Ins.  Co.,  7  Daly,  273. 

PARTIES. —  In  proceedings  by  the  attorney-general  for  the  appointment  of 
a  receiver  of  a  life  insurance  company,  the  court  has  jurisdiction  to  permit 
parties  interested  in  the  administration  of  the  assets  of  the  corporation  to 
appear  and  represent  their  own  interests,  and  to  be  made  parties  to  all  pro- 
ceedings taken  by  or  against  the  receiver  by  which  their  rights  may  be 
affected.    Attorney-General  v.  North  Am.  Life  Ins.  Co.,  77  N.  Y.,  297. 

EXCEPTIONS. —  The  receiver  of  an  insolvent  insurance  company,  appointed 
under  the  insurance  act  of  1869,  could  file  exceptions  to  the  report  of  the 
referee  appointed  to  take  proof  of  claims.  Attorney-General  v.  North  Am. 
Ins.  Co.,  82  N.  Y.,  172. 

INVESTMENT  OF  FUNDS.— The  receiver  has  no  authority  without  the 
direction  or  consent  of  the  court,  to  invest  the  money  in  his  hands;  in  the 
absence  of  directions  it  is  his  duty  simply  to  keep  and  protect  the  trust  fund, 
and  hold  it  ready  for  distribution.  Attorney-General  v.  North  Am.  Ins.  Co., 
89  N.  Y.,  95. 

INSOLVENT  COMPANY. —  An  insolvent  life  insurance  company  organized 
under  the  laws  of  this  state,  may  be  dissolved  and  its  affairs  wound 
up  at  the  instance  of  a  single  stockholder.  Masters  v.  Eclectic  Life  Ins.  Co. 
6  Daly,  455. 

FORFEITURE  OF  POLICY.—  One  holding  a  policy  of  life  insurance  does  noi 
forfeit  his  policy  by  omitting  to  pay  annual  premiums  thereon  after  the  com- 


114  The  Insurance  Law.  §  77. 

pany  issuing  the  policy  has  ceased  to  do  business,  transferred  all  its  assets 
and  become  insolvent.     People  v.  Empire  Mut.  Ins.  Co.,  92  N.  Y.,  105. 

CONTRACTS  OF  COMPANY.— When  a  registered  policy  life  insurance  com- 
pany which  has  entered  into  a  contract  with  a  general  agent  for  his  services 
for  a  specified  term  at  a  stipulated  salary,  before  any  breach  of  the  contract 
on  its  part,  is  restrained  from  further  prosecuting  its  business  or  exercising 
its  corporate  franchises  by  order  of  the  court,  and  a  receiver  of  its  assets  ia 
appointed,  the  agent  has  no  valid  claim  upon  the  fund  in  the  hands  of  the 
receiver  for  damages  for  alleged  breach  of  contract,  because  of  the  discontinu- 
ance of  the  employment;  there  is  in  such  case,  no  breach  on  the  part  of  the 
company,  as  performance  is  prevented  and  the  contract  dissolved  by  the  action 
of  the  state.     People  v.  Globe  Mut.  Life  Ins.  Co.,  91  N.  Y.,  174. 

SERVICES  OF  ATTORNEY.— An  action  is  not  maintainable  against  the 
receiver  of  an  insolvent  life  insurance  company,  to  recover  for  services  ren- 
dered by  an  attorney  to  the  corporation  after  the  appointment  of  a  receiver; 
the  company  or  its  agents  cannot,  after  such  an  appointment,  subject  the 
funds  in  the  receiver's  hands  to  any  legal  liability.  Barnes  v.  Newcorab,  89 
N.  Y.,  108. 

In  a  suit  to  distribute  the  assets  of  a  defunct  insurance  company,  no  allow- 
ances should  be  granted  to  the  counsel  of  the  intervening  creditors  payable 
out  of  the  fund,  whether  such  allowance  be  claimed  under  the  Code  or  whether 
they  are  claimed  as  reasonable  counsel  fees  earned  by  the  counsel  of  these 
creditors.    Attorney-General  v.  Continental  Ins.  Co.,  63  How.  Pr.,  129. 

§  77.    Proceedings  by  receiver. 

Such  receiver  shall  immediately,  on  entering  upon  the  duties 
of  his  office,  appoint  a  comj^etent  actuary,  approved  by  the  super- 
intendent of  insurance,  who  shall  make  a  careful  investigation 
according  to  the  standard  fixed  by  the  laws  of  this  state  into  the 
condition  of  the  corporation,  and  report  thereon  in  writing,  under 
oath,  to  the  court,  the  superintendent  and  the  receiver.  If  it  shall 
be  found  by  such  report  that  the  securities  deposited  by  such  cor- 
poration in  the  insurance  department  and  its  assets  and  credits, 
including  the  future  premiums  that  will  mature  on  outstanding 
policies  and  other  obligations^  are  sufficient  under  the  laws  of  the 
state  to  pay  all  the  policies,  annuities  and  other  obligations  of 
the  corporation  as  they  may  mature  by  the  terms  thereof  and  the 
legal  costs  and  expenses  incident  to  the  business,  and  if,  uix)n 
due  notice  to  the  superintendent,  such  actuary's  report  shall  be 
confirmed  by  the  court,  the  receiver  shall  be  discharged  and  nil 
the  properties  and  effects  of  the  corporation  shall  be  immediately 
returned  to  the  sama 


§77.  LiFE^  Health^  Casualty  Corpoeations.  115 

If  the  report  of  the  actuary  shall  show  that  such  securities, 
assets,  credits  and  premiums  are  not  sufficient  under  the  laws  of 
the  state  to  pay  all  the  policies,  annuities  and  other  obligations 
of  the  corporation  as  they  may  mature  by  the  terms  thereof,  and 
the  legal  costs  and  expenses  of  the  receivership,  and  the  report 
shall,  upon  due  notice  to  the  superintendent,  be  confirmed  by  the 
court,  the  court  may  direct  the  conversion  of  the  securities  held 
by  the  superintendent  into  money  for  the  purpose  of  distribution, 
and  tlie  superintendent  shall,  thereupon,  with  the  consent  and 
advice  of  tlie  treasurer  of  the  state,  and  in  such  manner  as  the 
receiver,  superintendent  and  treasurer,  or  a  majority  of  them, 
shall  determine,  sell  and  convert  such  securities  into  money.  The 
proceeds  of  such  securities,  when  required  for  distribution,  and 
when  the  court  shall  make  an  order  for  that  purpose,  with  suitable 
provision  for  the  safety  of  the  moneys,  shall  be  paid  to  the  receiver 
on  his  giving  his  receipt  to  the  superintendent  and  shall  be  applied 
by  the  receiver,  under  the  direction  of  the  court,  to  the  payment 
of  the  registered  policyholders  of  the  corporation  in  proportion  t< 
the  net  value  of  their  policies  respectively,  and  to  the  registered 
annuities  of  the  corporation,  in  proportion  to  the  then  present 
value  of  their  respective  annuities,  as  estimated  by  the  legal 
standard  for  valuing  life  insurance  and  annuity  obligations  within 
this  state.  The  surplus  of  the  proceeds  of  such  securities,  if  any 
there  be,  with  all  the  other  assets  of  the  corporation,  shall  then 
be  applied  to  the  payment  of  all  the  just  debts  of  the  corporation 
incurred  in  continuing  and  carrying  on  its  lawful  business. 

5>ource. — Former  §  77;  originally  revised  from  L.  1869,  chap.  902,  §  8,  as 
amended  by  L.  1880,  chap.  168. 

See  §  79,  post.    Annual  investigation  of  affairs  of  company. 

POWERS  OF  RECEIVER. —  The  receiver  of  a  dissolved  insolvent  insurance 
company  primarily  represents  the  company,  as  well  as  all  persons  interested  in 
the  assets,  including  the  policyholders,  and  possesses  whatever  rights  the  cor- 
poration possessed  and  might  have  enforced  against  its  trustees  for  mis- 
feasance in  oflEice;  the  receiver  of  an  insolvent  corporation  may  enforce  the 
liability  of  its  trustees  or  directors  to  make  good  the  loss  occasioned  by  the 
company  by  their  misapplication  of  assets,  either  by  an  action  at  law  for 
damages  or  by  an  action  in  equity  for  an  accounting.  Mason  v.  Henry,  152 
N.  Y.,  529. 

A  promissory  note  given  upon  an  agreement  for  insurance  to  be  consum- 
mated upon  the  organization  of  a  mutual  insurance  company  may  be  collected 


116  The  Insueance  Law.  §  '^T. 

by  the  receiver  upon  the  insolvency  of  the  company.  White  v.  Haiglit,  16 
N.  Y.,  310;    Hart  v.  Achilles,  28  Barb.,  576. 

A  receiver,  so  far  as  relates  to  his  conduct,  the  distribution  of  assets,  or  any 
of  the  proceedings  subsequent  to  his  appointment,  is  governed  by  the  pro- 
visions of  the  statutes  in  relation  to  corporations,  and  by  the  practice  of 
court ^^^    •!  equity.     People  v.  Security  Life  Ins.  Co.,  78  N.  Y.,  114. 

The  receiver  of  an  insolvent  insurance  company  may,  at  any  time,  apply 
to  the  court  for  instructions  in  regard  to  any  matter  touching  the  fund 
placed  in  his  custody.     People  v.  Security  L.  Ins.  Co.,  79  N.  Y.,  267. 

Before  amendment  of  this  section,  the  receiver  had  no  authority  to  require 
from  the  superintendent  the  securities  deposited  with  him,  and  the  court  had 
no  povv^er  to  compel  the  superintendent  to  transfer  the  trust  imposed  upon 
him.  Ruggles  v.  Chapman,  59  N.  Y.,  163;  People  ex  rel.  Ruggles  v.  Chapman, 
64  N.  Y.,  557. 

ACTION,  BY  WHOM  BROUGHT.— A  stockholder  or  a  creditor  of  a  life 
insurance  company  cannot  bring  an  action  for  the  dissolution  of  the  company 
and  the  distribution  of  its  assets.  Attorney-General  v.  Continental  L.  Ins. 
Co.,  53  How.  Pr.,  16. 

ACTUARY'S  REPORT.— Practice  on  motion  to  confirm  actuary's  report. 
People  V.  Globe  Mut.  L.  Ins.  Co.,  60  How.  Pr.,  57. 

The  duties  of  the  actuary  terminate  with  his  report,  unless  such  duties  are 
continued  by  the  coiu-t,  and  the  compensation  which  is  to  be  paid  must  be 
fixed  by  the  court,  and  is  not  under  the  control  of  the  receiver,  superintendent 
of  insurance  or  actuary.    Matter  of  North  Am.  Ins.  Co.,  55  How.  Pr.,  465. 

in  case  the  actuary's  report  sustains  the  solvency  of  the  company,  it  must 
be  confirmed  by  the  court  before  the  business  can  be  continued  as  the  statute 
directs;  such  confirmation  is  not  required  when  the  actuary's  report  is  adverse 
to  the  company's  solvency.     Matter  of  Atlantic  Mut.  Ins.  Co.,  55  How.  Pr.,  77 

Where  the  company  has  been  declared  to  be  insolvent  and  its  afi"airs  put 
into  the  hands  of  a  receiver,  judicial  action  must  thereafter  follow  the  statute; 
where  the  actuary's  report  shows  that  the  company  is  not  able  to  go  on  with 
its  business,  the  assets  must  be  turned  into  money,  liabilities  paid,  and  the 
corporate  affairs  closed  up;  the  Supreme  Court  cannot  order  tht  receiver  to 
call  for  premiums,  and  keep  up  the  business  of  the  company,  nor  can  it  dis- 
charge the  receiver  and  give  back  the  property  to  the  corporation.  Attorney- 
General  V.  At.  Mut.  Ins.  Co.,  77  Hun,  336. 

PARTIES  DEFENDANT.— Parties  claiming  interest  in  funds  in  hands  of 
1  receiver  should  not  be  made  parties  defendant.  People  v.  Family  Fund  Soc, 
31  App.  Div.,  627. 

PREFERENCE.— A  creditor  of  an  insolvent  corporation  whose  debt  accrued 
by  reason  of  a  loan  to  the  company  to  pay  a  loss  which  had  occurred  previous 
to  the  calamity  which  rendered  the  company  insolvent,  is  not  entitled  to  a 
preference  in  payment  out  of  the  funds  which  the  company  held  beyond  their 
capital  stock  at  the  time  of  such  calamity.  De  Peyster  v.  Am.  Fire  Ins.  Co.,  6 
Paige,  486. 

Holders  for  claims  for  death  losses,  and  the  holders  of  assignments  of  such 
claims,  are  to  be  first  paid  by  the  receiver,  and  the  balance  remaining  in  his 


§  78.  LiFE^  Health^  Casualty  Coepoeations.  117 

hands  is  to  be  divided  pro  rata  among  all  tlie  other  creditors.    Kitchen   v. 
Conklin,  51  How.  Pr.,  308. 

RESERVE  FUND. — As  to  right  of  policyholders  and  claimants  to  share  in 
the  reserve  fund.    Matter  of  Equitable  Reserve  Fund  Ass'n,  131  N.  Y.,  354. 

SALARIES  OF  0FFICE:RS.— The  officers  of  an  insolvent  corporation  are 
not  entitled  to  have  their  salaries  paid  in  full  in  preference  to  the  debts  of 
other  creditors;  they  are  only  entitled  to  be  paid  their  ratable  proportion  of 
the  assets  of  the  company  as  between  them  and  other  creditors.  Matter  of 
Croton  Ins.  Co.,  3  Barb.  Ch.,  642. 

UNEARNED  PREMIUMS. —  The  unearned  premiums  received  in  advance 
upon  policies  of  insurance  are  not  surplus  profits  which  the  directors  are 
authorized  to  distribute  as  dividends  among  the  stockholders  of  the  company, 
but  are  the  ordinary  means,  or  primary  fund,  out  of  which  the  losses  upon 
such  policies  should  be  paid.     Scott  v.  Eagle  Fire  Co.,  7  Paige,  198. 

PAYMENT  OF  PREMIUMS.— At  the  time  of  the  appointment  of  a  receiver, 
certain  policies  were  running  upon  which  premiums  had  been  paid  to  some 
time  subsequent  to  that  date;  the  receiver  gave  notice  that  he  would  receive 
no  more  premiums;  the  persons  insured  died  after  the  time  to  which  premiums 
had  been  paid;  the  referee  allowed  the  claims  on  these  policies.  Held,  no 
error;  that  further  payments  of  premiums  were  excused  by  the  failure  of  the 
company,  as  well  as  by  the  express  notice  of  the  receiver;  also,  that  the 
claimants  were  entitled  each  to  be  allowed  the  present  value  of  the  policy  at 
the  time  of  the  dissolution  of  the  company  and  the  appointment  of  the 
receiver,  deducting  the  amount  of  premiums  unpaid  at  the  time  of  death- 
Attorney-General  V.  Guardian  Mut.  L.  Ins.  Co.,  82  N.  Y.,  336. 


§  78.    Additional  duties  of  receiver. 

Whenever  the  business  of  any  such  corporation  shall  be  continued 
under  the  provisions  of  the  next  preceding  section,  if  the  receipts 
for  premiums  and  from  all  other  sources  shall  at  any  time  be  in 
excess  of  the  sums  required  to  meet  the  policy  and  other  obligations 
of  the  corporation,  such  receiver,  whenever  such  excess  shall  amount 
to  twenty-five  thousand  dollars,  shall  invest  the  same  in  such 
securities  as  are  authorized  to  be  deposited  in  the  insurance  depart- 
ment, and  shall  deposit  such  securities  with  the  superintendent  of 
insurance  in  the  manner  herein  provided. 

Source. — Former  §  78;   originally  revised  from  L.  1869,  chap.  902,  §  9. 

The  receiver  has  no  authority  without  the  direction  or  consent  of  the  court 
to  invest  the  money  in  his  hands;  in  the  absence  of  directions  it  is  his  duty 
simply  to  keep  and  protect  the  trust  fund,  and  hold  it  ready  for  distribution. 
Attorney-General  v.  North  Am.  Ins.  Co.,  89  N.  Y.,  94. 


118  The  Insurance  Law.  §  79. 

§  79.  Annual  investigation  of  affairs  of  such  corporation; 
disposition  of  surplus. 

An  investigation  shall  annually  be  made  on  the  first  day  of 
January,  or  within  thirty  days  thereafter,  by  a  competent  actuary 
approved  by  the  superintendent  of  insurance,  into  the  affairs  of 
such  corporation.  If,  upon  such  investigation,  it  shall  be  found 
that  a  surplus  of  its  assets,  not  less  in  amount  than  ten  thousand 
dollars,  exists,  after  making  adequate  provision  for  meeting  after 
maturity  all  the  obligations  of  the  corporation  and  all  the  legal 
expenses  of  the  receivership,  and  in  case  of  a  joint-stock  corpora- 
tion, over  and  above  tlie  amount  of  its  capital,  such  portion  of  such 
surplus  as  may,  under  the  charter  of  the  corporation,  if  a  stock 
corporation,  belong  to  its  stockholders,  shall  be  set  aside  and 
invested  by  the  receiver  in  such  securities  as  are  authorized  to  be 
deposited  by  life  insurance  corporations  in  the  insurance  depart- 
ment as  a  contingent  fund,  and  scrip  therefor  shall  be  issued  by 
the  receiver  to  such  stockholders,  respectively,  in  proportion  to 
their  respective  shares  bearing  six  per  cent,  interest,  and  payable 
on  the  final  settlement  of  the  aifairs  of  the  corporation  as  herein 
provided.  The  remainder  of  such  surplus,  if  the  corporation  be 
a  stock  corporation,  and  the  whole  of  such  surplus,  if  it  be  a 
mutual  corporation,  shall  be  disposed  of  as  follows:  One-quarter 
thereof  shall  be  reserved  by  such  receiver  and  invested  by  him  in 
such  securities  as  a  contingent  fund,  for  whidi  scrip  shall  be 
issued  by  such  receiver  to  all  policy  holders  entitled  under  their 
policies  to  share  in  the  surplus  of  the  corporation.  Sucli  scrip 
shall  bear  interest  at  the  rate  of  six  per  cent.,  payable  annually, 
and  shall  be  redeemable  on  the  maturity  of  the  policy  on  accoimt 
of  which  the  scrip  was  issued. 

The  remaining  three-fourths  of  such  surplus  shall  be  paid  by 
the  receiver  within  one  year  from  such  first  day  of  January,  to 
such  policy  holders  respectively  in  lawful  money  of  the  United 
States.  jSTo  scrip  shall  be  issued  for  any  fractional  part  of  a  dol- 
lar, and  any  scrip  so  issued  may  at  any  time  be  called  in  and 
canceled  by  the  receiver  without  payment,  if  necessary,  to  better 
secure  the  remaining  obligations  of  the  corporation,  and  all  the 
gcrip  so  issued  shall  have  printed  thereon  a  clause  to  the  following 


§  79.  LiFE^  Health^  Casualty  Cokpoeations.  119 

eifect:  If,  on  the  final  accounting  of  tlie  receiver,  after  the  liqui- 
dation of  all  the  obligations  of  the  corporation  as  herein  provided, 
and  in  case  of  a  joint-stock  corporation  the  return  to  the  respective 
stocldiolders  »f  their  respective  amounts  of  stock  and  the  scrip 
issued  to  them  under  this  section,  there  shall  remain  a  surplus  in 
the  hands  of  the  receiver,  it  shall  be  divided  by  him  among  the 
stockholders,  if  in  a  stock  corporation,  proportionately  to  their 
respective  shares,  as  provided  by  the  charter  of  the  corjx)ration, 
and  the  balance  of  such,  surplus,  if  any,  among  the  last  ten  policy 
holders  of  the  corporation  or  their  legal  representatives  in  propor- 
tion to  the  amounts  of  their  respective  policies,  and  if  not  a  stock 
corporation,  among  the  holders  of  the  last  ten  policies  issued  by  the 
corporation  or  their  legal  representatives  in  proportion  to  the 
amount  of  tlieir  respective  policies. 

Source. — Former  §  79;  originally  revised  from  L.  1869,  chap.  902,  §  10. 

See  notes  and  annotations  under  §§76  and  77. 

VALUATION  OF  POLICIES. —  The  damages  for  every  policy  of  insurance 
should  be  computed  according  to  the  facts  as  they  existed  upon  the  last  day 
of  the  presentation  of  claims  to  the  receiver,  and  that  in  the  exercise  of  a 
sound  discretion  the  court  should  not  take  into  consideration  the  fact  that 
death  had  subsequently  occurred  in  making  such  valuation;  when  the  policies 
have  been  valued  and  a  dividend  made  which  was  ascertained  and  computed 
upon  the  facts  as  they  existed  on  the  day  when  claims  were  required  to  be 
presented,  they  should  not  be  revalued  because  a  death  had  since  occurred. 
Matter  of  Attorney-General  v.  Continental  Ins.  Co.,  64  How.  Pr.,  73. 

Claims  under  policies  of  a  life  insurance  company  which  has  been  dissolved 
for  insolvency  and  placed  in  the  hands  of  a  receiver,  in  an  action  instituted 
by  the  attorney -general,  must  be  valued  and  determined,  and  their  status 
fixed  as  of  the  date  of  the  commencement  of  the  action  for  dissolution,  and 
are  not  affected  by  the  death  of  the  insured  after  that  date  and  before  th© 
distribution  of  assets.    Attorney- General  v.  Guard.  Life  Ins.  Co.,  82  N.  Y.,  336. 

REVALUATION. —  When  a  claim  will  not  be  revalued  on  account  of  the 
uninsurable  condition  of  the  assured  at  the  time  of  the  valuation.  People  v. 
Knickerbocker  Ins.  Co.,  38  Hun,  601. 

Where,  after  the  expiration  of  the  time  specified  in  the  published  notice  for 
the  Dresentation  of  claims  to  a  receiver  of  an  insolvent  life  insurance  corpora- 
tion, t-ei-tain  policyholders,  whose  claims  had  been  presented  and  allowed,  died, 
the  court  held  that  it  had  power  to  direct  a  revaluation  of  such  policies,  and 
tiie  exercise  of  this  power  was  within  its  discretion;  and  that  therefore  an 
order  denying  an  application  for  such  revaluation  on  the  ground  solely  of  lack 
of  power  was  error.  Matter  of  Attorney-General  v.  Continental  Ins.  Co.,  88 
N.  Y..  77. 

DEATH  CLAIMS. —  An  order  was  made  directing  a  claim,  under  a  policy 
issued  by  defendant,  to  be  filed  with  the  receiver  as  of  August  15,  1883,  and 


120  The  Insurance  Law.  §  80. 

directinj?  a  reference  for  its  valuation;  before  the  hearing  the  person  upon 
whose  life  the  policy  was  issued  died,  and  evidence  was  given  tending  to  show 
that  at  the  time  when  the  company  became  insolvent  and  suspended  its 
business  he  had  attained  an  age  and  had  become  subject  to  a  mortal  disease 
which  would  have  precluded  a  reinsurance  or  further  insurance  of  his  life 
by  any  life  insurance  company  in  good  standing;  the  disease  continued  until 
the  time  of  his  death,  and  was  in  part  the  cause  of  that  event;  it  was  shown 
upon  the  hearing  that  no  disturbance  in  the  accounts  or  dividends  of  the 
receiver  would  be  made  by  valuing  this  as  a  death  claim,  and  that  it  could 
be  provided  for  and  disposed  of  as  such  without  substantial  injustice  to  other 
claimants.    People  v.  Knickerbocker  Ins.  Co.,  40  Hun,  44. 

When,  after  a  policy  in  an  insolvent  insurance  company  has  been  valued 
and  placed  upon  the  receiver's  dividend  list,  the  holder  thereof  dies,  the  court 
will  not,  upon  the  application  of  his  executor,  direct  that  the  policy  be 
revalued  as  a  death  claim  and  order  the  receiver  to  pay  dividends  thereon 
upon  the  basis  of  the  latter  valuation.    People  v.  Sec.  Ins.  Co.,  23  liun,  COl. 

Where  the  insured  died  after  the  claim  on  the  policy  was  presented  to  the 
receiver   and   the   proofs    required   by   the   policy   were   afterward   filed  and 
retained  by  the  receiver,  the  wife  was  entitled  to  have  her  policy  valued  upon 
the  basis  of  her  husband's  death,  and  not  as  an  existing  and  continuing  insur 
ance.    People  v.  Knickerbocker  Life  Ins.  Co.,  34  Hun,  476. 

COUNTEKCLAIM. —  Where,  at  the  time  of  the  appointment  of  the  receiver, 
the  insurance  company  held  certain  claims  against  the  defendant  and  the 
defendant  held  two  endowment  policies  not  yet  due,  issued  by  the  company, 
the  defendant  was  not  entitled  to  offset  the  reserve  value  of  the  policies 
Newcomb  v.  Almy,  96  N.  Y.,  308. 

ACCOUNTING  OF  RECEIVER  —  Where,  during  the  pendency  of  proceedings 
for  an  accounting  instituted  by  the  receivers  of  an  insolvent  insurance  com- 
pany, one  of  the  receivers  dies,  the  court  has  power  to  make  an  order  reviving 
and  continuing  the  accounting  against  his  executors  and  directing  them  to 
come  into  such  accounting  and  stand  by  such  orders  and  decrees  as  may  be 
made  therein.    Matter  of  Columbian  Ins.  Co.,  30  Hun,  342. 

§  80.    Existing  corporations. 

Any  life  insurance  corporation  whicli  by  virtue  of  any  law  was 
niaking  deposit  of  securities  and  receiving  registered  policies  on 
the  eighteenth  day  of  May,  eighteen  hundred  and  ninety-two,  shall 
make  such  deposits  and  receive  such  policies  in  accordance  with  this 
chapter,  and  not  otherwise.  Such  corporation  shall  be  authorized 
to  issue  such  policies  and  annuity  bonds  as  shall  be  registered 
under  this  article,  and  shall,  whenever  required  by  the  holders  of 
its  unregistered  policies  and  annuity  bonds,  issued  previous  to 
the  passage  of  this  chapter,  u|)on  their  compliance  with  the  terms 
and  conditions  of  such  corporation  for  registered  policies  and  annu- 
ity bonds,  issue  to  them  respectively,  registered  policies  and  annuity 


§  SI.  Life,  Health,  Oasualty  'Ookpokations.  121 

bonds  in  exchange  for  and  in  value  equal  to  those  previously  issued 
to  tliein.  Any  corporation  availing  itself  of  the  provisions  of  this 
article,  may  issue  unregistered  policies  and  annuity  bonds  as  here- 
tofore authorized  by  its  charter,  but  subject  to  the  provisions  of 
this  article  in  relation  to  the  distribution  of  its  assets. 

Source. — Former  §  80;  originally  revised  from  L.  1853,  chap.  463,  §  21,  as 
amended  by  L.  1880,  chap.  427;  L.  1869,  chap.  902,  §  11. 

§  81.    Powers  of  receiver. 

The  receiver  of  any  such  corporation  shall  have  all  the  powers  in 
cideut  to  the  successful  management  of  its  affairs,  and,  to  that  end, 
authority  to  purchase  policies  issued  by  the  corporation,  to  make 
any  other  compromise  or  settlement  of  its  outstanding  obligations, 
and  to  use  the  corporate  seal  of  the  corporation  whenever  necessary 
to  the  transaction  of  the  business  of  his  receivership. 

The  receiver  may  employ  such  clerks  and  actuaries  as  he  may 
deem  necessary  for  the  proper  conduct  of  his  business  as  such 
receiver,  and  such  clerks  and  actuaries  shall  be  paid  such  reason- 
able compensation  as  he  may  determine,  subject,  however,  to  the 
approval  of  the  superintendent  of  insurance.  The  compensation 
of  such  receiver,  clerks  and  actuaries  shall  be  a  charge  upon  the 
funds  of  such  corporation  and  paid  out  of  such  funds. 

Source.— Former  §  81;  originally  revised  from'  L.  1869,  chap.  902,  §§  12,  13. 

FEES. —  The  Supreme  Court  has  power  in  the  first  instance  to  order  the 
fees  of  a  referee,  appointed  to  take  proofs  and  report  as  to  the  claims  of  a 
receiver  of  an  insolvent  life  insurance  company  for  compensation  and  expenses, 
to  be  paid  out  of  the  fund.  Attorney-General  v.  Continental  Life  Ins.  Co., 
93  N.  Y.,  45. 

Where  a  receiver  has  advanced  money  to  pay  taxes  on  lands  covered  by 
mortgages  in  the  hands  of  the  superintendent  then  being  foreclosed,  which 
advances  were  repaid  from  the  proceeds  of  the  foreclosure,  the  receiver  is  not 
entitled  to  commissions  upon  the  sum  so  refunded.  Attorney-General  v. 
North  Am.  Ins.  Co.,  89  N.  Y.,  94. 

SERVICES  OF  ATTORNEY.— An  attorney  who,  upon  the  retainer  of  cer- 
tain of  the  policyholders  in  an  insolvent  insurance  company,  has  appeared 
and  resisted  improper  claims  made  by  the  receiver  against  the  assets  in  his 
hands,  has  no  legal  claim  to  be  compensated  for  such  services  by  the  receiver 
out  of  the  assets  of  the  corporation.  Attorney-General  v.  Continental  Life 
Ins.  Co.,  31  Hun,  623. 

An  action  is  not  maintainable  against  the  receiver  of  an  insolvent  life 
insurance  company  to  recover  for  services  rendered  by  an  attorney  to  the 


122  The  Insurance  Law.  §§  82,  83. 

corporation  after  the  appointment  of  the  receiver;  the  company  or  its  officers 
cannot,  after  such  an  appointment,  subject  the  funds  in  the  receiver's  hands 
to  cmy  legal  liability.    Barnes  v.  Newcomb,  89  N.  Y.,  108. 

SPECIAL  COUNSEL. —  The  attorney -general  has  no  authority  to  appoint 
special  counsel  to  act  generally  for  him  in  the  conduct  of  suits  or  proceedings 
in  which  the  state  is  interested;  and  no  authority  exists  to  employ  counsel 
to  aid  him,  save  where  it  is  expressly  authorized  by  statute.  Matter  o^ 
Attorney- General  v.  Continental  Ins.  Co.,  88  N.  Y.,  571. 

§  82.  When  receiver  shall  not  be  appointed,  or  new  policies 
issued. 

No  receiver  for  any  life  insurance  corporation  shall  be  appointed 
if  such  corporation  has  actual  funds  invested  according  to  law,  of 
a  net  cash  value  equal  to  its  outstanding  liabilities,  exclusive  of 
any  contingent  liability  incurred  under  the  provisions  of  section 
seventy-one  of  this  chapter  relating  to  the  organization  of  a  mutual 
corporation,  and  a  sufficient  reserve  on  policies  and  claims  not 
matured,  calculated  according  to  the  American  experience  table  of 
mortality,  with  interest  at  four  and  one-half  per  centum  pei 
annum,  and  in  computing  such  liabilities,  capital  stock  shall  be 
considered  as  a  liability  of  the  corporation.  But  no  such  corpo- 
ration shall  issue  new  policies  if  its  capital  stock  is  impaired  to 
the  extent  of  fifty  per  centum  tliereof,  after  charging  said  corpora- 
tion with  a  reserve  liability  calculated  according  to  the  provisions 
of  section  eighty-four  of  this  chapter,  until  such  impairment  is 
made  good;  in  the  case  of  a  corporation  having  no  capital  stock, 
it  shall  not  issue  new  policies  if  its  assets  are  less  than  its  liabili- 
ties as  above  defined  and  upon  the  basis  last  before  mentioned,  until 
such  deficiency  is  made  good. 

Source. — Former  §  2,  as  amended  by  L.  1901,  cliap.  514,  and  L.  1906, 
chap.  326;  originally  revised  from  L.  1884,  chap.  341,  §  2;  L.  1887,  ohap.  328. 

§  83.    Distribution  of  surplus  to  policy  holders. 

Except  as  herein  provided,  every  domestic  life  insurance  cor- 
poration heretofore  or  hereafter  organized,  whether  incorporated 
by  special  act  or  under  a  general  statute,  anything  in  its  charter  or 
certificate  of  incorporation  or  in  such  special  act  or  general  statute 
to  the  contrary  notwithstanding,  shall  provide  in  every  policy  issued 
on  or  after  the  first  day  of  January  nineteen  hundred  and  seven, 


§   83.  Life,  Heai^tfi,  Casualty  Corporations.  123 

that  the  proportion  of  the  surplus  accruing  upon  said  policy  shall 
be  ascertained  and  distributed  annually  and  not  otherwise.  Upon 
the  thirty-first  day  of  December  of  each  year,  or  as  soon  thereafter 
as  may  be  practicable,  every  such  corporation  shall  well  and  truly 
ascertain  the  surplus  earned  by  such  corporation  during  said  year. 
After  setting  aside  from  such  surplus  such  sums  as  may  be  re- 
quired for  the  payment  of  authorized  dividends  upon  the  capital 
stock,  if  any,  and  such  sums  as  may  properly  be  held  for  account  of 
existing  deferred  dividend  policies,  and  for  a  contingency  resei'A^e 
not  in  excess  of  the  amount  prescribed  in  this  article,  every  such 
corporation  shall  apportion  the  remaining  surplus  equitably  to 
all  other  policies  entitled  to  share  therein.  Except  in  the  case 
of  a  term  or  an  industrial  policy,  the  share  of  surplus  so  appor- 
tioned in  the  case  of  a  policy  issued  on  or  after  the  first  day  of 
January,  nineteen  hundred  and  seven  sliall,  at  the  option  of  the 
owner  of  the  policy,  be  payable  in  cash,  or  shall  be  applicable  to 
the  payment  of  any  premiimi  or  premiums  upon  said  policy  or  to 
the  purchase  of  a  paid-up  addition  thereto  or  shall  be  permitted  U) 
accumulate  to  the  credit  of  the  policy  at  such  rate  of  interest 
as  shall  be  allowed  by  the  company,  and  with  such  interest  shall  be 
payable  upon  the  maturity  of  the  policy  or  shall  be  withdrawable 
in  cash  by  the  owner  of  the  policy  on  any  anniversary  of  the 
dat^  of  issue  thereof.  Such  corporation  may  require  the  owner  of 
the  policy  to  elect  the  manner  in  which  said  dividends  shall  be 
applied  as  above  provided  by  mailing  a  written  notice  of  the 
amount  of  the  said  dividends  and  the  options  available  as  afore- 
said in  a  sealed  envelope  in  the  manner  required  by  the  provisions 
of  this  chapter  for  notices  of  premium  payments,  and  in  case  the 
owner  shall  fail  to  notify  the  company  in  writing  of  his  election 
within  three  months  after  the  date  of  the  mailing  of  said  notice, 
the  surplus  shall  be  applied  by  the  company  to  the  purchase  of  a 
paid-up  addition  to  the  sum  insured.  In  the  case  of  a  term 
policy  issued  on  or  after  the  first  day  of  January,  nineteen 
hundred  and  seven  the  share  of  surplus  so  apportioned  shall  be 
payable  to  the  owner  of  the  policy  in  cash  or  shall  be  applicable 
to  tlie  payment  of  any  premium  or  premiums  upon  said  policy,  or 
if  so  provided  in  the  policy  shall  be  permitted  to  accumulate  to  the 
credit  of  the  policy  at  such  rate  of  interest  as  shall  be  allowed 


124  The  Insurance  Law.  §  83. 

by  the  company  and  in  vSnch  case  shall  be  payable  upon  the 
maturity  or  expiration  of  the  policy  or  shall  be  withdrawable  in 
cash  by  the  holder  of  the  policy  on  any  anniversary  of  the  date  of 
issue  thereof.  In  case  of  industrial  policies  the  share  of  surplus 
so  apportioned  shall  be  payable  annually  in  such  manner  as  may 
be  determined  hy  the  com,pany  with  approval  of  the  superintend- 
ent of  insurance.  The  dividends  declared  as  aforesaid  in  the  case 
of  a  policy  issued  on  or  after  the  first  day  of  January,  nineteen 
hundred  and  seven,  shall  be  payable  respectively  either  upon  the 
anniversary  of  the  policy  next  after  said  thirty-first  day  of  Decem- 
ber or  upon  a  day  certain  in  the  year  following  said  date,  accord- 
ing to  the  rules  of  the  corporation  or  the  terms  of  the  policy,  and 
upon  the  sole  condition  that  the  premium  payments  for  the  policy 
year  current  upon  said  thirty-first  day  of  December  shall  have 
been  completed. 

This  section  shall  not  apply  to  any  stock  life  insurance  corpora- 
tion which  on  or  after  the  first  day  of  January,  nineteen  hundred 
and  seven,  ijhall  transact  and  shall  represent  itself  as  transacting 
its  business  exclusively  upon  a  nonmutual  basis  and  shall  after 
said  date  issue  only  nonparticipating  policies.  Xor  shall  this  sec- 
tion apply  to  paid-up  or  temporary  and  pure  endowment  insurance 
issued  or  granted  in  exchange  for  lapsed  or  surrendered  policies. 
A  foreign  life  insurance  corporation  which  shall  not  provide  in 
every  participating  policy  issued  or  delivered  in  this  state  on  or 
after  the  first  day  of  January,  nineteen  hundred  and  seven,  that 
the  proportion  of  the  surplus  accruing  upon  said  policy  shall  be 
ascertained  and  distributed  annually  and  not  otherwise,  and  which 
shall  not  ascertain  and  distribute  the  surplus  accruing  upon  said 
policies  annually  either  by  providing  for  their  payment  in  cash  or 
their  application  to  the  payment  of  premiums  or  to  the  purchase 
of  paid-up  additions  or  for  their  accumulation  as  above  provided 
in  the  case  of  domestic  corporations  shall  not  be  permitted  to  do 
business  within  thij  state. 

Source. — Former  §  83,  as  amended  by  L.  1906,  chap.  32();  originally  revised 
from  L.  1872,  chap.  100. 

Amended  by  L.  1915,  chap.  617.     In  effect  May  12,  1915. 

Note. —  The  amendment  of  1915  providted  for  annual  distribution  of  surplus 
to  industrial  policyholders  in  such  a  manner  as  may  ibe  approved  by  the 
superintendient.  The  purpose  was  to  enable  a  stock  company  which  had 
changed  into  a  mutual  company  to  continue  its   foniu  r  i»ractice  of  granting 


§   83.  LiFE^  Health^  Casualty  Coeporations.  125 

participation  in  piofits  to  industrial  policyholders,  which  participation  had  not 
l)oen  a  inattt>r  of  Ic^ai  riglit,  there  ])eing  no  provision  in  the  statute  requiring 
annual  distribution   to   industrial  policyholders. —  Ed. 

See  §  87,  post.    Restrictions  as  to  dividends  removed. 

See  §  604,  Penal  Law,  which  makes  it  a  misdemeanor  for  a  director  to  make 
a  dividend  except  from  surplus  profits. 

EQUITY. —  A  complaint  in  an  action  by  the  holders  of  a  policy  of  life 
insurance  against  the  insurance  company,  which  alleges  that  the  action  is 
brought  "  as  well  in  behalf  of  these  plaintiffs  as  of  all  other  policyholders 
similarly  situated  who  may  choose  to  come  in,"  etc..  is  necessarily  li)nited 
to  equitable  relief.     Taylor  v.  Charter  Oak  Ins.  Co..  9  Daly,  489. 

An  action  by  the  holder  of  a  policy  in  a  mutual  life  insurance  company 
for  equitable  relief  cannot  be  maintained  upon  an  alleged  trust  in  the  defend 
ants  for  the  benefit  of  the  plaintiff;  the  relations  between  the  company  and 
its  policyholders  are  those  of  contractors,  the  contract  being  the  policy,  by 
which  the  liabilities  of  the  company  are  to  be  determined.  Mencken  v.  United 
States  Life  Ins.  Co.,  11  Daly,  282. 

TONTINE  POLICY. —  An  action  on  a  tontme  policy  is  premature  if  brought 
before  the  tontine  period  has  expired.  Simons  v.  N.  Y.  Life  Ins.  Co.,  .S8 
Hun,  309. 

A  life  insurance  company  issuing  policies  on  the  tontine  or  "  ten  years 
dividend  system,"  is  in  no  sense  a  trustee  of  any  particular  fund  for  the 
holder  of  such  a  policy;  their  relations  are  simply  that  of  debtor  and  creditor, 
and  the  policyholder  at  the  expiration  of  the  ten  years  is  not  entitled  to  nn 
accounting  in  the  absence  of  any  evidence  of  misappropriation,  wrongdoing 
or  mistake  on  the  part  of  the  company.  Uhlman  v.  N.  Y.  Life  Ins.  Co.,  109 
N.  Y.,  421. 

It  was  held  in  Illinois  that  companies  doing  business  on  the  tontine  savings 
fund  plans  do  not  come  within  a  statute  providing  for  distribution  of  surplus 
to  policyholders.    Romer  v.  Equitable  Life,  101  III.  App.  Ct.  Rep.,  621. 

SURPLUS. —  Where,  under  a  contract  of  life  insurance,  only  the  propor- 
tion of  the  company's  surplus  which  equitably  belonged  to  the  policy  was 
to  be  credited  to  it  and  paid  to  the  policyholder,  an  ascertainment  and  deter- 
mination of  that  proportion  is  a  condition  precedent  to  the  poUcy-hohler's 
right  of  recovery  of  any  portion  of  the  surplus  in  an  action  at  law.  Greetf 
v.  Equitable  Life  Assur.  Soc,  160  N.  Y.,  19. 

DIVIDENDS.  —  An  insurance  company  can  only  pay  dividends  out  of 
surplus  and  profits;  they  cannot  lawfully  be  paid  out  of  capital  contributed 
by  shareholders  for  the  purpose  of  carrying  on  the  company's  business  and 
for  the  protection  of  its  creditors;  such  ''dvidends  are  prohibited  by  §  694 
of  the  Penal  Coa«J  and  §  83  of  the  Insurance  Law.  Berryman  v.  Bankers' 
Life  Insurance  Co.,  117  App.  Div.,  730. 

Tlie  superintendent  upon  examining  a  life  insurance  company  as  to  its 
financial  condition  cannot  disregard  the  liability  created  by  the  company 
against  itself  by^  the  credit  and  payment  of  dlividends  paid  out  of  accumulated 
surplus  andJ  the  capital  of  the  company,  nor  allow  as  an  asset  the  lien 
sought  to  be  created  on  the  policy^  —  contracts  of  those  who  have  been  paid 
the  dividends  in  cash;  that  is  within  the  power  of  the  company  and  policy-- 
holders to  establish  their  exact  financial  relation  in  reference  to  declared 
dividends  by^  resorting  to  the  courts.     Attorney-General  Rep.,  June  20,  1906. 


126  The  Insurance  Law.  §  84. 

An  insurance  company  cannot  lawfully  pay  dividends  out  of  capital  con- 
tributed by  shareholders  for  the  purpose  of  carrying  on  the  company's  busi- 
ness for  the  protection  of  its  creditors,  and  such  dividends  are  prohibited  by 
section  664  of  the  Penal  Law  and  section  83  of  the  Insurance  Law.  Berryman 
V.  Bankers'  Life  Ins.  Co.,  117  App.  Div.,  730. 

POLICIES. —  A  life  insurance  company,  originally  organized  on  a  non- 
participating  basis,  which  has  afterwards  elected  to  do  a  participating  busi- 
ness cannot  thereafter  return  to  a  nonparticipating  basis.  Attorney-General's 
Opinion,  Sept.  24,  1909. 

Application  of  Dividend. —  A  policyholder  under  this  section  may  give  notice 
as  to  his  selection  of  the  manner  he  wishes  his  dividend  applied,  such 
selection  to  hold  good  imtil  further  notice,  the  change,  if  any,  to  take  eflfeet 
on  an  anniversary  of  the  date  of  issue  of  the  policy.  Ruling  of  Ins.  Dept., 
February  26,  1914. 

§  84.    Valuation  of  policies. 

The  superintendent  of  insurance  shall  annually  make  valuation? 
of  all  outstanding  policies,  additions  thereto,  unpaid  dividends, 
and  all  other  obligations  of  every  life  insurance  corporation  doing 
business  in  this  state.  All  valuations  made  by  him  or  by  his 
authority  shall  be  made  upon  the  net  premium  basis.  The  legal 
minimum  standard  for  contracts  issued  before  the  first  day  of 
January,  nineteen  hundred  and  one,. shall  be  the  actuaries'  or  com- 
bined experience  table  of  mortality  with  interest  at  four  per 
centum  per  annum,  and  for  contracts  issued  on  or  after  said  day 
shall  be  the  American  experience  table  of  mortality  with  interest 
at  three  and  one-half  per  centum  per  annum;  provided  that  tho 
legal  minimum  valuation  of  all  contracts  issued  on  or  after  tbe  firat 
day  of  January,  nineteen  hundred  and  seven,  shall  be  in  accord 
ance  with  the  select  and  ultimate  method,  and  on  the  basis  that  the 
rate  of  mortality  during  die  first  five  years  after  the  issuance  of 
said  contracts  respectively  shall  be  calculated  according  to  tlic 
following  percentages  of  the  rates  shown  by  the  American  experi- 
ence table  of  mortality,  to  wit,  first  insurance  year  fifty  pei 
centum  thereof,  second  insurance  year  sixty-five  per  centum 
thereof,  third  insurance  year  seventy-five  per  centum  thereof, 
fourth  insurance  year  eighty  five  per  centum  thereof,  and  fifth 
insurance  year  ninety-five  per  centum  thereof.  The  super 
intendent  may  vary  the  standards  of  interest  and  mortality  in  thr 
case  of  corporations  from  foreign  countries  as  to  contracts  issued 
by  such  corporations  in  other  countries  than  the  Unit>ed  States; 


§  84.  LiFE^  Health^  Casualty  Corporations.  127 

and  in  particular  cases  of  invalid  lives  and  other  extra  hazards, 
and  value  policies  in  groups,  use  approximate  averages  for  frac 
tions  of  a  year  and  otherwise,  and  accept  the  valuation  of  the 
department  of  insurance  of  any  other  state  or  country  if  made  upon 
the  basis  and  according  to  the  standards  herein  required  in  place 
of  the  valuation  herein  required.  No  policy  issued  after  the  thirty- 
first  day  of  December,  nineteen  hundred  and  six,  shall  be  valued  as 
term  insurance  unless  premiums  are  based  upon  net  term  rates; 
and  no  policy  with  level  premiums  issued  after  said  date  shall  be 
v^alued  as  term  insurance  for  the  first  policy  year.  The  legal 
minimum  standard  for  the  valuation  of  annuities  issued  after 
January  first,  nineteen  hundr^  and  seven,  shall  be  McClintock's 
"  Tables  of  Mortality  among  Annuitants  "  with  interest  at  three 
and  one-half  per  centum  per  annum,  but  annuities  deferred  ten 
or  more  years  and  written  in  connection  with  life  or  term  insur- 
ances shall  be  valued  on  the  same  mortality  table  from  which  the 
consideration  or  premiums  were  computed,  with  interest  not  higher 
than  three  and  one-half  per  centum  per  annum.  The  legal  mini- 
mum standard  for  the  valuation  of  industrial  policies  issued  after 
the  first  day  of  January,  nineteen  hundred  and  seven,  shall  be  the 
American  experience  table  of  mortality  with  interest  at  three  and 
one-half  per  centum  per  annum,  provided,  that  any  life  insurance 
corporation  may  voluntarily  value  its  industrial  policies  written 
on  the  weekly  premium  payment  plan  according  to  the  standard 
industrial  mortality  table  or  the  substandard  industrial  mortality 
table.  Any  life  insurance  corporation  may  voluntarily  value  its 
policies,  or  any  class  thereof,  according  to  the  American  experi- 
ence table  of  mortality,  or  if  industrial,  at  its  option,  according  to 
the  standard  industrial  mortality  table  or  substandard  industrial 
mortality  table,  at  a  lower  rate  of  interest  that  that  above  pre- 
scribed, but  not  lower  than  three  per  centum  per  annum,  and  with 
or  without  reference  to  the  select  and  ultimate  method  of  valuation, 
and  in  every  such  case  shall  report  the  standards  used  by  it  in 
making  the  same  to  the  superintendent  of  insurance  in  its  annual 
statement,  provided  that  no  such  standards  if  adopted  shall  be 
abandoned  without  the  consent  of  the  superintendent  of  insurance 
first  obtained  in  writing. 


128  The  Insukance  Law.  §  85. 

Source.— -  Former  §  84,  as  amended  by  L.  1893,  chap.  147;  L.  1901,  chap.  346; 
L.  1906,  chap.  326,  and  L.  1909,  chap.  301 ;  originally  revised  from  L.  1853,  chap. 
463,  §  13,  as  amended  by  L.  1873,  chap.  849;  t.  1884,  chap.  341,  §§  1,  2. 

Amended  by  L.  1910,  chap.  616,  and  L.  1913,  chap.  304. 

Note. — ^The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  was  to  broaden  the  powers  of  the  superintendent  in  reference  to  receipts 
of  certificates  of  valuation  of  life  insurance  policies  made  by  other  state  de- 
partments and  by  eliminating  the  words  — "  any  excess  of  its  valuation  over 
those  computed  by  the  said  legal  minimum  standard  and  also,"  and  to  relieve 
companies  not  using  Select-and-Ultimate  valuation  from  unnecessary  labor  and 
expense. — Ed. 

Note. —  The  amendment  by  L.  1910,  chap.  616,  provided  that  the  legal 
minimum  standard  for  the  valuing  of  industrial  policies  should  ibe  based  on 
the  Standard  or  Sub- standard  Industrial  Mortality  Table. —  Ed. 

An  insurance  company,  originally  organized  as  a  fraternal  organization, 
thereafter  reorganized  under  the  assessment  plan  and  later  as  a  stock  com- 
pany, maintains  a  suflBcient  reserve  on  the  policies  of  former  Class  A  when 
it  provides  that  members  of  the  former  Class  A  should  be  assessed  one  dollar 
for  each  death,  and  that  there  should  be  set  aside  a  fund  of  one  dollar  per 
1,000  on  all  insurancfe  issued  on  the  new  Class  B,  which  fund  should  go  to 
meet  any  deficit  in  assessments  of  Class  A  when  the  membership  dropped 
below  1,000,  and  the  mortuary  fund  was  continued  until  the  corporation 
organized  as  a  stock  company  when  it  was  discontinued,  because  no  longer 
required,  and  when  upon  the  last  reorganization  the  company  carried  a  reserve 
figured  under  §  84  of  the  Insurance  Law,  the  reserve  being  applicable  to 
all  classes  of  policies.  Kelshaw  v.  Bankers'  Life  Insurance  Co.,  117  App.  Div., 
726. 

In  view  of  the  change  in  this  section  omitting  "  any  excess  of  its  valuations 
over  those  computed  by  the  said  legal  minimum  standard  and  also,"  it  will 
not  be  necessary  to  prepare  a  valuation  for  1913  on  the  "  Select  and  Ultimate  " 
basis.     Ruling  of  Ins.  Dept.,  July  8,  1913. 

§  85.    When  actual  premium  is  less  than  net  premium. 

When  the  actual  premium  charged  for  an  insurance  by  any  life 
insurance  corporation  doing  business  in  this  state  is  less  than  the 
net  premium  for  such  insurance  computed  according  to  the  table 
of  mortality  and  rate  of  interest  prescribed  in  this  article,  such 
corporation  shall  be  charged  as  a  separate  liability  with  the  value 
of  an  annuity,  the  amount  of  which  shall  equal  the  difference 
between  such  premiums  and  the  term  of  which  in  years  shall 
equal  the  number  of  future  annual  payments  due  on  such  insurance 
at  the  date  of  the  valuation. 

Source. — Former  §  85;  originally  revised  from  L.  1884,  chap.  341,  §   1. 


§  86.  LiFE^  Health^  Casualty  Corporations.  129 

§  86.  Assets  and  liabilities  of  life  and  casualty  Insurance 
corporations;  method  of  computation;  procedure  in  case  of 
impairment;  reserve. 

1.  In  estimating  the  condition  of  any  life  insurance  corporation, 
under  the  provisions  of  this  chapter,  or  in  any  examination  made 
by  him,  or  by  an  examiner  appointed  by  him,  the  superintendent 
shall  allow  as  assets  only  such  investments  as  are  author- 
ized by  the  laws  of  this  state,  and  shall  charge  as 
liabilities,  in  addition  to  the  capital  stock,  all  outstanding 
indebtedness  of  the  corporation,  and  the  premium  reserve  on  poli- 
cies, and  additions  thereto  in  force  computed  according  to  the  table 
of  mortality  and  rate  of  interest  prescribed  in  this  article.  Any 
assets  or  securities  lawfully  held  or  acquired  for  the  satisfaction, 
reduction  or  guaranty  of  any  indebtedness  to  the  corporation  shall 
be  allowed  as  assets  at  their  just  value  in  the  judgment  of  the 
superintendent,  but  the  total  assets  invested  and  otherwise  of  every 
domestic  life  insurance  corporation  shall  be  held  to  be  accumula- 
tions for  the  exclusive  benefit  of  policy  holders,  and  no  payment  to 
stockholders  shall  be  made  therefrom  until  all  obligations  to  policy 
holders  and  creditors  have  been  fully  provided  for,  including  the 
reserve  required  by  section  eighty-four  of  this  chapter  to  be  deter- 
mined by  the  superintendent  of  insurance.  Whenever  it  shall 
appear  to  the  said  superintendent  from  the  statement  of  any  life 
insurance  corporation  made  to  the  insurance  department,  or  from 
an  examination  of  the  affairs  of  any  such  corporation,  if  a  stock 
corporation,  that  its  capital  stock  is  impaired  to  the  extent  of 
fifty  per  centum  thereof  upon  the  basis  of  such  reserve  liability 
for  policies  and  annuities  in  force  as  may  be  the  standard  used 
within  this  state  at  the  time  of  ascertaining  such  impairment,  it 
shall  be  the  duty  of  said  superintendent,  if  the  corporation  is 
organized  under  the  laws  of  any  other  state  or  country,  to  revoke 
the  certificate  of  authority  issued  to  the  agent  or  agents  of  such 
corporation,  and  cause  a  notice  thereof  to  be  published  in  the  state 
paper  for  four  weeks,  and  the  agent  or  agents  of  such  corporation 
are,  after  such  notice,  required  to  discontinue  the  issuing  of  any 
new  policies.  If  the  corporation  so  impaired  is  organized  under 
the  laws  of  this  state,  it  shall  be  the  duty  of  said  superintendent 
to  direct  the  officers  thereof  to  require  the  stockholders  to  make 


130  The  Insurance  Law.  §  86. 

good  in  cash  the  amount  of  such  deficiency  within  ninety  days 
after  the  date  of  his  requisition.  And  upon  the  failure  of  the 
stockholders  to  make  good  such  deficiency  within  the  time  specified 
in  such  requisition,  tlie  corporation  shall  then  he  subject  to  the 
provisions  of  section  twenty-one  of  this  chapter.  Provided  that 
any  corporation  organized  under  tlie  laws  of  tliis  state,  whase 
3apital  is  impaired  as  above  fifty  per  centum,  may  by  a  vote  of  a 
majority  of  its  directors  at  a  meeting  called  for  that  purpose 
reduce  its  capital  stock  to  an  amount  not  less  than  one  hundred 
thousand  dollars ;  and  the  said  directors  are  hereby  empowered  to 
issue  new  certificates  of  stock  to  the  stockholders  for  the  amount 
of  the  reduced  capital,  and  require  in  return  all  certificates  pre- 
viously issued. 

2.  In  estimating  the  condition  of  any  casualty  insurance 
corporation,  under  the  provisions  of  this  chapter,  the  super- 
intendent shall  allow  as  assets  only  such  investments  as  are 
authorized  by  the  existing  laws  of  this  state,  at  the  date  of  its 
investigation;  and  shall  charge  as  liabilities,  in  addition  to  the 
capital  stock,  all  outstanding  indebtedness  of  the  corporation,  and 
the  premium  reserve  on  policies  in  force,  equal  to  the  unearned 
portions  of  the  gross  premiums  charged  for  covering  the  risks, 
computed  on  each  respective  risk  from  the  date  of  the  issuance  of 
the  policy.  The  indebtedness  for  outstanding  losses  under  insur- 
ance against  loss  or  damage  resulting  from  accident  to  or  injuries 
suffered  by  an  employee  or  other  person  and  for  which  the 
insured  is  liable,  and  under  insurance  against  loss  from  liability 
on  account  of  the  death  of  or  injury  to  an  employee  not  caused 
by  the  negligence  of  the  employer,  shall  be  determined  as  follows: 
Each  corporation  which  writes  policies  covering  any  of  the  said 
kinds  of  insurance  shall  include  in  the  annual  statement  required 
by  section  forty-four  of  this  chapter  a  schedule  of  its  experience 
thereunder,  in  the  United  States  and  foreign  countries  in  the 
ease  of  corporations  organized  in  the  United  States,  and  in  the 
United  States  only  in  the  case  of  corporations  organized  outside 
of  the  United  States,  giving  each  calendar  year's  experience  sep- 
arately, and  crediting  or  charging  each  item  to  the  year  in  which 
the  policy  to  which  it  relates  was  written,  as  follows:  (1)  the 
e-arned  premiums  on  all  such  policies  written  during  the  period  of 


§  86.  LiFE^  Health^  Casualty  Cobpokations.  131 

ten  years  immediately  preceding  the  date  as  of  vvLicli  the  state- 
ment is  made,  being  the  gross  premiums  on  all  such  policies 
including  excess  and  additional  premiums  and  premiums  in  course 
of  collection,  less  return  premiums  and  premiums  on  canceled 
policies,  and  less  the  unearned  premiums  on  policies  Jn  force  as 
shown  in  such  annual  statement;  (2)  the  amount  of  all  pay- 
ments of  whatsoever  nature  made  by  reason  or  on  account  of 
injuries  covered  by  such  policies  written  during  said  period.  This 
amount  shall  include  medical  and  surgical  attendance,  payments 
to  claimants,  legal  expenses,  salaries  and  expenses  of  investigators, 
adjusters,  and  field  men,  rents,  stationery,  telegraph  and  telephone 
charges,  postage,  salaries  and  expenses  of  office  employees,  home 
office  expenses,  and  all  other  payments  made  on  account  of  such 
injuries,  whether  such  payments  are  allocated  to  specific  claims 
or  are  unallocated;  (8)  the  number  of  suits  being  defended  at 
the  date  as  of  which  the  statement  is  madd  under  policies  written 
during  said  period,  except  suits  in  which  liability  is  not  dependent 
upon  negligence  of  the  insured,  and  a  charge  of  seven  hundred 
and  fifty  dollars  for  each  suit;  (4)  the  number  of  deaths  for 
which  the  insured  are  liable  without  proof  of  negligence,  covered 
by  policies  written  during  said  period,  and  not  paid  for  at  the 
date  as  of  which  the  statement  is  made  and  a  charge  of  the  amount 
necessary  to  pay  for  such  deaths;  (5)  the  number  of  unpaid  claims 
at  the  date  as  of  which  the  statement  is  made  on  account  of  nonfatal 
injuries  for  which  the  insured  are  liable  ^vithout  proof  of  negli- 
gence, covered  by  policies  written  during  said  period,  and  a  charge 
equal  to  the  present  value  of  the  estimated  future  payments;  (6) 
the  loss  ratio  determined  from  the  foregoing  as  to  each  year 
separately  using  as  the  divisor  the  earned  premiums  shown  in 
item  (1)  and  as  the  dividend  the  amount  of  payments  shown  in 
'tern  (2)  plus  the  amounts  charged  in  items  (3),  (4),  and  (5); 
(7)  the  number  of  suits  being  defended  at  the  date  as  of  which 
the  statement  is  made  under  policies  written  more  than  ten  years 
prior  to  such  date,  except  suits  in  which  liability  is  not  dependent 
upon  negligence  of  the  insured;  (8)  the  number  of  deaths  for 
which  the  insured  are  liable  without  proof  of  negligence,  covered 
by  policies  written  more  than  ten  years  prior  to  the  date  as  of 
which  the  statement  is  made,  and  not  paid   for  at  such   date; 


132  The  Insueance  Law.  §  86. 

(9)  the  number  of  unpaid  claims  at  the  date  as  of  which  the  state- 
ment is  made  on  account  of  nonfatal  injuries  for  which  the  insured 
are  liable  without  proof  of  negligence,  covered  by  policies  written 
more  than  ten  years  prior  to  such  date.  All  unallocated  pay 
ments  in  item  (2)  made  in  a  given  calendar  year  subsequent  to 
the  first  four  years  in  which  a  corporation  has  been  issuing  such 
policies  shall  be  distributed  as  follows:  Thirty-five  per  centum 
shall  be  charged  to  the  policies  written  in  that  year,  forty  per 
centum  to  the  policies  written  in  the  preceding  year,  ten  per 
centum  to  the  policies  written  in  the  second  year  preceding_,  ten 
per  centum  to  the  policies  written  in  the  third  year  preceding, 
and  five  per  centum  to  the  policies  written  in  the  fourth  vear  pre- 
ceding, and  such  payments  made  in  the  first  four  calendar  years 
in  which  a  corporation  has  been  issuing  such  policies  shall  be 
distributed  as  follows:  in  the  first  calendar  year  one  hundred  per 
centum  shall  be  charged  to  the  policies  written  in  that  year,  in 
the  second  calendar  year  fifty  per  centum  shall  be  charged  to 
policies  written  in  that  year  and  fifty  per  centum  to  the  policies 
written  in  the  preceding  year,  in  the  third  calendar  year  forty 
per  centum  shall  be  charged  to  the  policies  written  in  that  year, 
forty  per  centum  to  the  policies  written  in  the  preceding  year, 
and  twenty  per  centum  to  the  policies  written  in  the  second  year 
preceding,  and  in  the  fourth  calendar  year  thirty-five  per  centum 
shall  be  charged  to  the  policies  written  in  that  year,  forty  per 
centum  to  the  policies  written  in  the  preceding  year,  fifteen  per 
centum  to  the  policies  written  in  the  second  year  preceding,  and 
ten  per  centum  to  the  policies  written  in  the  third  year  preceding, 
and  a  schedule  showing  such  distribution  shall  be  included  in  such 
annual  statement.  Each  such  corporation  shall  be  charged  with 
indebtedness  for  outstanding  losses  upon  such  policies  determinecl 
as  follows:  (10)  for  all  suits  being  defended  under  policies  Avritten 
more  than  ten  years  prior  to  the  date  as  of  which  the  statement 
is  made,  except  suits  in  which  liability  is  not  dependent  upon 
negligence  of  the  insured,  one  thousand  dollars  for  each  suit; 
(11)  for  all  suits  being  defended  under  policies  written  more 
than  five  years  and  less  than  ten  years  prior  to  the  date  as  of 
which  the  statement  is  made,  except  suits  in  which  liability  is  not 
dependent  upon  negligence  of  the  insured,  seven  huii(]rc(]   and 


§  b(j.  LiFE^  Health^  Casualty  Coepokations.  133 

fifty  dollars  for  each  suit;  (12)  for  all  deaths  for  which  the 
insured  are  liable  without  proof  of  negligence,  covered  by  policies 
written  more  than  five  years  prior  to  the  date  as  of  which  the 
statement  is  made,  the  amount  necessary  to  pay  for  such  deaths;  , 
(13)  for  all  unpaid  claims  on  account  of  nonfatal  injuries  for 
which  the  insured  are  liable  without  proof  of  negligence  under 
policies  written  more  than  five  years  prior  to  the  date  as  of  which 
the  statement  is  made,  the  present  value  of  the  estimated  future 
payments;  (14)  for  the  policies  written  in  the  five  years  imme- 
diately preceding  the  date  as  of  which  the  statement  is  made  an 
amount  determined  as  follows:  Multiply  the  earned  premiums 
of  each  of  such  five  years  as  shown  in  item  (1)  by  the  loss  ratio 
ascertained  as  in  item  (6)  on  all  the  policies  written  in  the  first 
five  years  of  the  said  ten-year  period  using  as  the  divisor  the  sum 
of  the  earned  premiums  shown  in  item  (1)  for  such  first  ^Ye  years, 
and  as  the  dividend  the  sum  of  the  payments  shown  in  item  (2) 
for  such  first  five  years  plus  the  sum  of  the  charges  in  items  (3), 
(4)  and  (5)  for  such  first  five  years,  but  the  ratio  to  be  used  shall 
in  no  event  be  less  than  fifty  per  centum  at  and  after  December 
thirty-first,  nineteen  hundred  and  eleven,  nor  less  than  fifty-one 
per  centum  at  and  after  December  thirty-first,  nineteen  hundred 
and  twelve,  nor  less  than  fifty-two  per  centum  'at  and  after  Decem- 
ber thirty-first,  nineteen,  hundred  and  thirteen,  nor  less  than  fifty- 
three  per  centum  at  and  after  December  thirty-first,  nineteen  hun- 
dred and  fourteen,  nor  less  than  fifty-four  per  centum  at  and  after 
December  thirty-first,  nineteen  hundred  and  fifteen,  nor  less  than 
fifty-five  per  centum  at  and  after  December  thirty-first,  nineteen 
hundred  and  sixteen,  and  from  the  amount  so  ascertained  in  each 
of  the  last  five  years  of  said  ten-year  period  deduct  all  payments 
made  under  policies  written  in  the  corresponding  year  as  shown 
in  item  (2),  and  the  remainder  in  the  case  of  each  year  shall  be 
deemed  the  indebtedness  for  that  year,  provided,  however,  that 
if  the  remainder  in  the  case  of  any  year  of  the  first  three  years  of 
the  five  years  immediately  preceding  the  date  as  of  which  the 
statement  is  made  shall  be  less  than  the  sum  of  the  three  following 
items  for  that  year  at  that  date  —  (a)  the  number  of  suits,  except 
suits  in  which  liability  is  t^-"^  dependent  upon  negligence  of  the 
insured,  being  defended  under  policies  written  in  that  year  and 


134  The  Insurance  Law.  §  86. 

a  charge  of  seven  hundred  and  fifty  dollars  for  each  suit,  (b)  the 
amount  necessary  to  pay  for  all  deaths  for  which  the  insured  are 
liable  without  proof  of  negligence,  covered  by  policies  written  in 
that  year,  and  (c)  the  present  value  of  estimated  unpaid  claims 
on  account  of  nonfatal  injuries  for  which  the  insured  are  liable 
without  proof  of  negligence,  covered  by  policies  written  in  that 
year  —  then  the  sum  of  said  items  (a),  (b)  and  (c)  shall  be  the 
indebtedness  for  that  year.  A  corporation  which  has  been  issuing 
such  policies  for  a  period  of  less  than  ten  years  shall  nevertheless 
include  in  its  annual  statement,  a  schedule  as  hereinbefore  re- 
quired for  the  years  in  which  it  shall  have  issued  such  policies, 
and  shall  be  charged  with  an  indebtedness  determined  in  the  same 
manner,  but  in  determining  the  indebtedness  for  policies  written 
in  the  five  years  immediately  preceding  the  date  as  of  which  tlie 
statement  is  made,  the  minimum  ratio  hereinbefore  prescribed 
shall  be  used  subject  to  the  same  deductions  and  provisions  as  in 
the  case  of  corporations  that  have  been  issuing  such  policies  for 
ten  years  or  more. 

Source.— Former  §  86,  as  amended  by  L.  1901,  chap.  514;  L.  1903,  chap.  566; 
L.  1904,  chap.  486;  iL.  1905,  chap.  113;  originally  revised  from  L.  1853,  chap. 
463,  §  17,  ae  amended  by  L.  1879,  chap.  161. 

Amended  by  L.  1911,  chap.  183,  and  L.  1913,  chap.  304. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  was  to  eliminate  a  previous  ambiguity  regarding  allowance  of  assets 
in  the  examination  of  a  life  company. — Ed. 

REAL  ESTATE.— Investments  may  be  made  in  real  estate  mortgages  ol 
another  state  under  §  16  by  an  insurance  company  of  this  state  which  rein 
sures  the  risks  held  by  a  company  of  that  state.  Attorney-General  Rep., 
1896,  page  145. 

VALUATION. —  When  an  insurance  company  originally  organized  as  a 
fraternal  organization  has  thereafter  successively  incorporated  as  a  mutual 
company  and  as  a  stock  company,  under  chapter  690  of  the  Laws  of  1893, 
the  valuation  of  policies  issued  when  the  corporation  was  a  mutual  company 
for  the  purpose  of  ascertaining  the  amount  of  reserve,  should  be  made  under 
S  52  of  the  Insurance  Law,  if  such  valuation  does  not  violate  any  provision, 
express  or  implied,  of  the  original  contract  of  insurance;  the  reserve  need  not 
be  determined  by  valuing  such  policies  as  whole  life  policies  under  §  86  of 
the  Insurance  Law.    Elder  v.  Bankers'  Life  Insurance  Co.,  117  App.  Div.,  722. 

Liquor  tax  certificates  are  issued  as  of  October  first  in  each  year,  and  per- 
sons taking  out  such  liquor  tax  certificates  file  surety  company  bonds  for  the 
year.  The  financial  statements  of  surety  companies  uniting  in  such  bond? 
should  carry  as  unearned  premium  reserve  for  such  bonds  seventy-five  per  cent 
of  the  premium  receipts,  such  financial  statements  dating  as  of  December 
thirty-first,  and,  therefore,  at  the  date  of  such  financial  statement,  such  bonds 
would  have  been  in  existence  three  months.    Chapter  720  of  T^ws  1893  does 


§  87.  LiFE^  Health^  Casualty  Cokporations.  135 

not  expressly  repeal  or  amend  the  provisions  of  section  86  of  chapter  690  of 
Laws  1892,  which  has  been  re-enacted  and  amended  in  the  years  1901,  1903, 
1904  and  1905.  Thus  it  may  be  assumed  that  the  legislature  intended  both 
statutes  to  remain  in  force,  and  it  is  therefore  desirable  to  so  construe  them 
that  both  may  be  given  effect.     Attorney-Generars  Opinion,  December  14,  1908. 

Tiie  stockholders  of  a  domestic  life  insurance  company  cannot  be  held  for 
an  amount  exceeding  the  sum  collected  or  collectible  from  the  stockholders, 
upon  their  stock  subscriptions.  There  is  a  provision  of  the  Insurance  Law 
relating  to  the  duty  of  the  superintendent  in  case  a  stock  life  insurance 
corporation  becomes  impaired;  the  superintendent  must  direct  the  officers  to 
require  the  stockholders  to  make  good  the  deficiency  within  ninety  days; 
upon  tlheir  failure  to  do  so,  the  corporation  may  be  proceeded  against  as  an 
insolvent  corporation.    Ruling  of  Ins.  Dept.,  Feb.  27,  1915. 

Section  86  (reserve  requirementsi)  is  applicable  to  corporations  organized 
under  section  70,  subd.  9.    Attorney-General  Kep.,  July  13,  1905. 

§  87.    Contingency  reserve. 

Anv  domestic  life  insurance  cor}X)ration  may  accumulate  and 
maintain  in  addition  to  an  amount  equal  to  the  net  values  of  its 
policies  computed  according  to  the  standard  adopted  by  it  under 
section  eighty-four  of  this  chapter  a  contingency  reserve  not 
exceeding  the  following  respective  percentages  of  said  net  values, 
to  wit :  When  said  net  values  are  less  than  one  hundred  thousand 
dollars,  twenty  per  centum  thereof  or  the  sum  of  ten  thousand 
dollars,  whichever  is  the  greater ;  when  said  net  values  are  greater 
than  one  hundred  thousand  dollars,  the  percentage  thereof 
measuring  the  contingency  reserve  shall  decrease  one-half  of  one 
per  centum  for  each  one  hundred  thousand  dollars  of  said  net 
values  up  to  one  million  dollars ;  one-half  of  one  per  centum  for 
each  additional  one  million  dollars  up  to  ten  million  dollars ;  one- 
half  of  one  per  centum  for  each  additional  two  million  five  hun- 
dred tliousand  dollars  up  to  twenty  million  dollars ;  one-fourth 
of  one  per  centum  for  each  additional  ^ve  million  dollars  up 
to  fifty  million  dollars ;  and  if  said  net  values  equal  or  exceed 
the  last  mentioned  aanount,  the  contingency  reserve  shall 
not  exceed  seven  and  one-half  per  centum  thereof;  provided 
that  as  the  net  values  of  said  policies  increase  and  the  maxi- 
mum percentage  measuring  the  contingency  reserve  decreases  such 
corporation  may  maintain  the  contingency  reserve  already  accumu- 
lated hereunder,  although  for  the  time  being  it  may  exceed  the 
maximum  percentage  herein  prescribed,  but  may  not  add  to  the 
contingency  reserve  when  the  addition  will  bring  it  beyond  the 


136  The  Insurance-  Law.  §  88. 

maximum  percentage.  Provided  however  that  nothing  herein  con- 
tained shall  be  construed  to  affect  any  existing  surplus  or  con- 
tingency reserves  held  by  any  such  corporation  save  that  when- 
ever the  existing  surplus  and  contingency  reserves,  exclusive  of 
said  net  values  and  of  all  accumulations  held  on  account  of 
existing  deferred  dividend  policies  or  groups  of  such  policies,  shall 
exceed  the  limit  above  mentioned  it  shall  not  be  entitled  to  main- 
tain any  additional  contingency  reserve.  Provided  further  that 
for  cause  shown  the  superintendent  of  insurance  may  at  any  time 
and  from  time  to  time  permit  any  corporation  to  accumulate  and 
maintain  a  contingency  reserve  in  excess  of  the  limit  above  men- 
tioned for  a  prescribed  period,  not  exceeding  one  year  under  any 
one  permission,  by  filing  in  his  ofiice  a  decision  stating  his  reasons 
therefor  and  causing  the  same  to  be  published  in  his  next  annual 
report.  This  section  shall  not  apply  to  any  corporation  doing 
exclusively  a  non-participating  business. 

Source. — Former  §  87,  as  added  by  L.  1906,  chap,  326. 

Amended  by  L.  1916,  chap.  119.     In  effect  April  3,  1916. 

See  §  83,  ante.    Distribution  of  surplus  to  policyholders. 

See  §  664,  Penal  Law.  Misconduct  of  directors  of  monied  corporations  as 
to  loans,  etc. 

See  §  28,  Stock  Corporation  Law,  chap.  61  of  1909.  Liability  of  directors  for 
making  unauthorized  dividends. 

The  provisions  of  section  87,  relating  to  the  limitation  of  the  contingency 
reserve  of  any  domestic  life  insurance  corporation,  d>o  not  apply  to  life  insur- 
ance corporations  incorporated  under  the  laws  of  other  states.  Ruling  Ins. 
Dept.,  April  29,  1913. 

The  contingency  reserve  provisions  of  this  section  are  not  applicable  to 
foreign  life  companies,     lluling  Ins.  Dept.,  April  29,  1913. 

An  insurance  company  may  lawfully  issue  a  policy  containing  a  clause  "  upon 
default  of  payment  of  premium  this  policy  will  be  binding  upon  the  company 
as  participating  paid-up  insurance  of  reduced  amount,  payable  at  the  same 
time  and  on  the  same  conditions  as  under  the  original  contract."  Kuling  Ins. 
Dept.,  Aug.  16,  1910. 

§  88.    Surrender  value  of  lapsed  or  forfeited  policies. 

Whenever  any  policy  of  life  insurance  issued  after  January 
first,  eighteen  hundred  and  eighty,  and  before  January  first  nine- 
teen hundred  and  seven,  by  any  domestic  life  insurance  corpora- 
tion after  being  in  force  three  full  years,  shall,  by  'its  terms, 
lapse  or  become  forfeited  for  the  non-payment  of  any  premium  or 
any  note  given  for  a  premium  or  loan  made  in  cash  on  such  policy 


§  88.  LiFE^  Health^  Casualty  Corporations.  137 

as  security,  or  of  any  interest  on  such  note  or  loan,  the  reserve  on 
such  policy  computed  according  to  the  American  experience  table 
of  mortality  at  the  rate  of  four  and  one-half  per  centum  per  annum 
shall,  on  demand  made,  with  surrender  of  the  policy  within  six 
months  after  such  lapse  or  forfeiture,  be  taken  as  a  oingle  premium 
of  life  insurance  at  the  published  rates  of  the  corporation  at  the 
time  the  policy  was  issued,  and  shall  be  applied,  as  shall  have  been 
agreed  in  the  application  or  policy,  either  to  continue  the  insurance 
of  the  policy  in  force  at  its  full  amount  so  long  as  such  single 
premium  will  purchase  temporary  insurance  for  that  amount,  at 
the  age  of  the  insured  at  the  time  of  lapse  or  forfeiture,  or  to 
purchase  upon  the  same  life  at  the  same  age  paid  up  insurance 
payable  at  the  same  time  and  under  the  same  conditions  except  as 
to  payments  of  premiums,  as  the  original  policy.  If  no  such  agree- 
ment be  expressed  in  the  application  or  policy,  such  single 
premium  may  be  applied  in  either  of  the  modes  above  specified 
at  the  option  of  the  owner  of  the  policy,  notice  of  such  option  to 
be  contained  in  the  demand  hereinbefore  required  to  be  made  to 
prevent  the  forfeiture  of  the  policy. 

The  reserve  hereinbefore  specified  shall  include  dividend  addi- 
tions calculated  at  the  date  of  the  failure  to  make  any  of  the 
payments  above  described  according  to  the  American  experience 
table  of  mortality  with  interest  at  the  rate  of  four  and  one-half 
per  centum  per  annum  after  deducting  any  indebtedness  of  the 
insured  on  account  of  any  annual  or  semi-annual  or  quarterly 
premium  then  due,  and  any  loan  made  in  cash  on  such  policy, 
evidence  of  which  is  acknowledged  by  the  insured  in  writing. 

The  net  value  of  the  insurance  given  for  such  single  premium 
under  this  section,  computed  by  the  standard  of  this  state,  shall  in 
no  case  be  less  than  two-thirds  of  the  entire  reserve  computed 
according  to  the  rule  prescribed  in  this  section  after  deducting  the 
indebtedness  as  specified;  but  such  insurance  shall  not  participate 
in  the  profits  of  the  corporation. 

If  the  reserve  upon  any  endowment  policy  applied  according  to 
the  provisions  of  this  section  as  a  single  premium  of  temporary 
insurance  be  more  than  sufficient  to  continue  the  insurance  to  the 
end  of  the  endowment  term  named  in  the  policy,  and  if  the 
insured  survive  tlint  term,  the  excess  shall  be  paid  in  cash  at  the 


138  The  Insurance  Law.  §  88. 

end  of  such  term,  on  the  conditions  on  which  the  original  policy 
was  issued. 

This  section  shall  not  apply  to  any  case  of  a  policy  issued 
before  January  first,  nineteen  hundred  and  seven,  where  the 
provisions  of  the  section  are  specifically  waived  in  the  applicatior 
and  notice  of  such  waiver  is  written  or  printed  in  red  ink  on 
the  margin  of  the  face  of  the  policy  when  issued.  If  any  policy 
of  life  insurance  (other  than  a  term  policy  for  twenty  years  oi 
less),  issued  on  or  after  January  first,  nineteen  hundred  and 
3even,  by  any  domestic  life  insurance  corporation,  after  being  in 
force  tliree  full  years  shall  by  its  terms  lapse  or  become  forfeited 
by  the  nonpayment  of  any  premium  or  any  note  therefor  or  any 
loan  on  such  policy  or  of  any  interest  on  such  note  or  loan,  the 
reserve  on  such  policy  computed  according  to  the  standard  adopted 
by  said  company  in  accordance  with  section  eighty-four  of  this 
chapter,  together  with  the  value  of  any  dividend  additions  upon 
said  policy,  after  deducting  any  indebtedness  to  the  company  and 
one-fifth  of  the  said  entire  reserve,  or  the  sum  of  two  and  fifty  one- 
hundredths  dollars  for  each  one  hundred  dollars  of  the  face  of  said 
policy  if  said  sum  shall  be  more  than  the  said  one-fifth,  shall  upon 
demand  not  later  than  three  months  after  the  date  of  lapse 
with  surrender  of  the  policy  be  applied  as  a  surrender  value  as 
agreed  upon  in  the  policy,  provided  that  if  no  other  option  expressed 
in  the  policy  be  availed  of  by  the  owner  thereof,  and  if  the  policy 
itself  does  not  direct  what  option  shall  become  operative  in  default 
of  selection  by  the  owner,  the  same  shall  be  applied  to  continue 
the  insurance  in  force  at  its  full  amount  including  any  outstanding 
dividend  additions  less  any  outstanding  indebtedness  on  the  policy 
but  without  future  participation  and  without  the  right  to  loans, 
so  long  as  such  surrender  value  will  purchase  nonparticipating 
temporary  insiTranco  at  net  single  premium  rates  by  the 
standard  adopted  by  the  company,  at  the  age  of  the  insured 
at  the  time  of  lapse  or  forfeiture,  provided  in  case  of 
any  endowment  policy  if  the  sum  applicable  to  the  purchase 
of  temporary  insurance  shall  be  more  than  sufficient  to  con- 
tinue the  insurance  to  the  end  of  the  endowment  term  named 
in  the  policy,  the  excess  shall  be  used  to  purchase  in  the  same 
manner  pure  endowment   insurance   payable  at  the  end   of  the 


§  88.  LiFE^  Health^  Casualty  Corporations.  139 

endowment  term  named  in  the  policy  on  the  conditions  on  which 
the  original  policy  was  issued,  and  provided  further  that  any 
attempted  waiver  of  the  provisions  of  this  paragraph  in  any 
application,  policy  or  otherwise,  shall  be  void,  and  provided 
further  that  any  value  allowed  in  lieu  thereof  shall  be  at  least 
equal  to  the  net  value  of  the  temporary  insurance  or  of  the 
temporary  and  pure  endowment  insurance  herein  provided  for. 
The  term  of  temporary  insurance  herein  provided  for  shall  include 
the  period  of  grace,  if  any.  In  every  case  where  a  contract  pro 
vides  for  both  insurance  and  annuities,  the  foregoing  provisions 
shall  apply  only  to  that  part  of  the  contract  which  provides  for 
insurance,  but  every  such  contract  containing  a  provision  for  a 
deferred  annuity  on  the  life  of  the  insured  only  (unless  paid 
for  by  a  single  premium)  shall  provide  that  in  the  event  of  the 
nonpayment  of  any  premium  after  three  full  years'  premiums 
shall  have  been  paid,  the  annuity  shall  automatically  become 
converted  into  a  paid-up  annuity  for  such  a  proportion  of  the 
original  annuity  as  the  number  of  completed  years'  premiums 
paid  bears  to  the  total  number  of  premiums  required  under  the 
contract. 

Source. — Former  §  88,  as  amended  by  L.  1906,  diap.  326;  originally  revised 
from  L.  1879,  cliap.  347,  §§  1,  2. 

Amended  by  L.  1909,  chap.  301;  L.  1909,  chap.  595  and  L.  1910,  chap.  614. 

FORFEITURE. — The  rule  that  a  strict  construction  is  to  be  given  to  a 
provision  of  forfeiture  in  a  policy  of  insurance,  and  that  it  may  not  be 
extended  for  the  purpose  of  working  a  forfeiture  beyond  the  strict  and  literal 
meaning  of  the  words  used,  applies  only  where  the  meaning  is  doubtful  and 
the  words  capable  of  two  constructions;  where  the  language  is  plain  and 
unequivocal  and  the  meaning  not  in  doubt,  in  the  absence  of  fraud  or  mistake, 
the  contract  must  be  enforced  as  it  reads.  Holly  v.  Metropolitan  Life  Ins. 
Co.,  105  N.  Y.,  437. 

Where  it  is  expressly  provided  that  the  premium  on  a  life  insurance  policy 
shall  be  paid  on  or  before  a  certain  day,  and  in  default  thereof  the  policy  shall 
be  void,  that  the  non-payment  of  the  premium  upon  the  day  named  works  a 
forfeiture.     Fowler  v.  Metropolitan  L.  Ins.  Co.,  116  N.  Y.  389. 

One  holding  a  policy  of  life  insurance  does  not  forfeit  his  policy  by  omitting 
to  pay  annual  premiums  thereon  after  the  company  issuing  the  policy  has 
ceased  to  do  business,  transferred  all  of  its  assets  and  become  insolvent. 
People  V.  Empire  Mut.  Life  Ins.  Co.,  92  N.  Y.,  105. 

Where  the  defendant  in  its  answer  alleges  a  forfeiture  of  the  policy  by 
reason  of  the  non-payment  of  a  single  specified  premium,  it  cannot,  upon  the 
trial,  assert  a  forfeiture  because  of  the  non-payment  of  subsequent  premiums. 
Meeder  v.  Provident  Sav.  Soc,  58  App.  Div.,  80. 

A  paid-up  policy  may  only  be  demanded  within  six  months  after  default, 
and  if  the  time  has  been  extended  by  any  act  or  omission  of  the  company, 


140  The  Insurance  Law.  §  88. 

that  fact  should  be  pleaded  as  one  essential  to  the  plaintiflf's  right  to  the  relief 
sought.     Stayner  v.  Equitable  L.  Assur.  Soc,  22  Misc.,  53. 

Where  a  policy  of  insurance  contains  a  provision  that  if  it  should  become 
void,  after  the  payment  of  the  premiums  for  three  years,  because  of  a  default 
in  the  payment  of  any  subsequent  premium,  the  insurer  would  issue  in  lieu 
thereof,  a  new  paid-up  policy,  "  provided  that  said  policy  shall  be  surrendered 
duly  receipted  within  six  months  of  the  date  of  default  in  payment  of  premium 
on  said  policy,"  the  fact  that  the  policy  sought  to  be  exchanged  had  been 
stolen,  and  that  it  is  impossible  for  the  policyholder  to  surrender  the  identical 
instrument,  does  not  excuse  him  from  his  duty  to  deliver  to  the  insurer  a 
sufficient  surrender  of  the  policy  and  a  sufficient  receipt  of  all  liability  thereon. 
Wilcox  V.  Equitable  L.  Assur.  Soc,  55  App.  Div.  529. 

§  88  perjnits  parties  to  a  life  insurance  contract  to  agree  in  the  application 
or  in  the  policy  itself,  in  the  event  of  a  lapse  for  non-payment  of  a  premium, 
either  to  the  continuance  of  the  policy  at  its  full  amount  so  long  as  such 
single  premium  will  purchase  temporary  insurance,  or  to  the  issuance  of  a 
policy  of  paid-up  insurance.  It  is  only  when  no  such  agreement  is  expressed 
in  the  application  or  policy  that  a  choice  of  the  modes  specified  in  the  statute 
is  available  to  the  insured.  Warren  v.  Postal  Life  Insurance  Co.,  163  App. 
Div.,  638. 

After  a  new  policy  is  issued,  the  insured  has  no  further  right  or  claim  under 
the  old  policy,  and  whatever  claim  he  has,  he  must  base  upon  the  new  policy. 
Matter  of  Attorney -General  v.  Continental  Ins.  Co.,  91  N.  Y.,  647. 

The  provisions  of  the  statutes  of  New  York  relative  to  forfeiture  of  policies 
by  insurance  companies  doing  business  therein,  for  nonpayment  of  premiums 
or  interest,  does  not  control  policies  issued  by  a  New  York  corporation  in 
another  State  to  residents  of  that  state.  Mut.  Life  Ins.  Co.  of  New  York 
V.  Cohen,  179  U.  S.,  262. 

Where  an  insurance  company  doing  business  within  a  state  issues  its  policies 
to  residents  of  that  state,  the  validity  of  clauses  in  its  policies  must  be  deter- 
mined by  the  laws  of  that  state.  Price  v.  Conn.  Mut.  Life  Ins.  Co.,  48  Mo. 
App.,  281;  Equitable  Life  Society  v.  Clements,  140  U.  S.,  226. 

As  §  88  provides  in  substance  that  if  a  premium  be  not  paid  when  due,  the 
insured  is  entitled  to  have  his  policy  extended  for  the  full  amount  from  the 
date  it  lapses  for  such  time  as  the  reserve  on  the  policy  taken  as  a  single 
premium  at  the  age  of  the  insured  at  the  time  of  forfeiture  would  purchase 
temporary  insurance,  after  deducting  any  indebtedness  of  the  insured  on  ac- 
count of  premiums  due,  the  beneficiary  of  one  holding  a  policy  containing  a 
similar  provision  inserted  pursuant  to  said  statute  is  entitled  to  recover  the 
full  amount  of  the  policy  on  the  death  of  the  insured  where,  having  been  un- 
able to  pay  the  full  amount  of  a  certain  premium,  he  gave  the  insurance 
company  a  six  months'  note  for  the  balance,  which  was  accepted  by  it  as 
payment  of  the  premium  and  on  maturity  of  the  note,  made  another  part 
payment,  giving  a  similar  note  for  the  balance,  even  though  the  latter  note 
was  not  paid  when  due,  if  in  fact  at  the  death  of  the  insured  the  difference 
between  the  part  payments  and  the  amount  of  the  second  note  was  sufficient 
to  purchase  continuing  insurance  for  a  period  extending  beyond  the  death  of 
the  insured.    Taylor  v.  New  York  Life  Insurance  Co.,  148  App.  Div.,  815. 

An  insured  paid  premiums  on  his  policy  for  three  years  and  gave  a  note  the 
fourth  year,  and  thereafter  wholly  defaulted;  the  insurer  rightfully  deducted 


§  89.  LiFE^  Health^  Casualty  Coepoeations.  141 

the  amount  due  on  the  note  in  computing  the  time  for  which  the  insured  was 
entitled  to  continued  insurance,  and  as  such  period  expired  before  his  death 
the  personal  representatives  are  entitled  to  nothing.  Taylor  v.  New  York 
Life  Ins.  Co.,  197  N.  Y.,  324;  rev'g  131  App.  Div.,  922. 

A  life  insurance  company  which  accepts  a  premium  note  under  an  agreement 
that  the  policy  shall  become  void  if  the  note  is  not  paid,  after  having  given 
notice  of  the  date  when  the  premium  became  due,  is  not  obliged  to  give  a 
similar  notice  respecting  the  maturity  of  the  note  in  order  to  declare  a  for- 
feiture of  the  policy;  where  an  insured  dies  within  six  months  after  his  polici 
lapsed,  the  beneficiary  is  entitled  to  the  protection  of  §  88  of  the  Insurance 
Law,  which  provides  for  the  continuation  of  the  policy  for  such  period  of  insur- 
ance as  may  be  purchased  by  any  reserve  without  making  the  demand  men- 
tioned in  said  law,  or  exercising  the  option  to  continue  the  policy;,  a  demand 
and  the  exercise  of  the  option  provided  for  by  the  policy  is  necessary  only 
where  the  insured  lives  for  the  six  months  following  the  forfeiture.  Bar- 
tholomew V.  Security  Mutual  Life  Insurance  Co.,  140  App.  Div.,  88. 

Cash  surrender  values  may  be  included  in  policy  contracts.  Ruling  Ins. 
Dept.,  July  9,  1906. 

Cash  payments  on  surrender  not  mandatory  on  company;  policy  controls. 
Ruling  Ins.  Dept.,  July  27,  1914. 

Surrendier  values  described,  in  law  are  minimum  values  and  larger  values 
may  be   allowed.     Ruling  Ins.  Dept.,  July  26,  1906. 

The  amendments  as  to  surrender  values  do  not  apply  to  foreign  life  insur- 
ance companies.     Ruling  Ins.  Dept.,  June  14,  1906. 

The  options  granted  the  insured  under  this  section  for  the  period  of  six 
months  may  be  exercised  by  the  insured  during  his  life  and  by  the  benefi- 
ciary after  the  death  of  the  insured,  if  any  part  of  said  six  months  has  not 
expired.    Bartholomew  v.  Security  Mut.  Life  Ins.  Co.,  204  N,  Y.,  649. 

§  89.    Discriminations  prohibited. 

No  life  insurance  corporation  doing  business  in  this  state  shall 
make  or  permit  any  discrimination  between  individuals  of  the 
same  class  or  of  equal  expectation  of  life,  in  the  amount  or  pay- 
ment or  return  of  premiums  or  rates  charged  for  policies  of 
insurance,  or  in  the  dividends  or  other  benefits  payable  thereon, 
or  in  any  of  the  terms  and  conditions  of  the  policy;  nor  shall  any 
such  company  permit  or  agent  thereof  offer  or  make  any  contract 
of  insurance  or  agreement  as  to  such  contract  other  than  as 
plainly  expressed  in  the  policy  issued  thereon;  nor  shall  any  such 
company  or  any  officer,  agent,  solicitor  or  representative  thereof 
pay,  allow  or  give,  or  offer  to  pay,  allow  or  give,  directly  or 
indirectly,  as  inducement  to  any  person  to  insure,  or  give,  sell  or 
purchase,  or  offer  to  give,  sell  or  purchase  as  such  inducement 
or  in  connection  with  such  insurance,  any  stocks,  bonds  or  other 
securities  of  any  insurance  company  or  other  corporation,  asso- 
ciation   or   partnership,    or    any    dividends    or    profits    accruing 


142  The  Insurance  Law.  §  89. 

thereon,  or  any  valuable  consideration  or  inducement  whatever 
not  specified  in  the  policy,  nor  shall  any  person  knowingly  receive 
as  such  inducement,  any  rebate  of  premium,  or  any  special  favor 
or  advantage  in  the  dividends  or  other  benefits  to  accrue  thereon, 
or  any  paid  employment  or  contract  for  services  of  any  kind  or 
any  valuable  consideration  or  inducement  whatever,  not  specified 
in  the  policy.  'No  person  shall  be  excused  from  attending  and 
testifying  or  producing  any  books,  papers  or  other  documents 
before  any  court  or  magistrate,  upon  any  investigation,  proceed- 
ing or  trial  for  a  violation  of  any  of  the  provisions  of  this  section, 
upon  the  ground  or  for  the  reason  that  the  testimony  or  evidence, 
documentary  or  otherwise,  required  of  him  may  tend  to  convict 
him  of  a  crime  or  subject  him  to  a  penalty  or  forfeiture;  but 
no  person  shall  be  prosecuted  or  subjected  to  any  penalty  or 
forfeiture  for  or  on  account  of  any  transaction,  matter  or  thing 
concerning  which  he  may  so  testify  or  produce  evidence,  docu- 
mentary or  otherwise,  and  no  testimony  so  given  or  produced 
shall  be  received  against  him  upon  any  criminal  investigation  or 
proceeding.  No  premium  upon  any  policy  of  life  insurance 
issued  on  or  after  January  first,  nineteen  hundred  and  seven, 
shall  be  charged  for  term  insurance  foi  one  year,  higher  in 
amount  than  the  premium  for  term  insurance  for  one  year  at 
the  same  age  under  any  other  form  of  policy  issued  by  such 
corporation;  provided,  that  nothing  in  this  chapter  shall  be  so  con- 
strued as  to  forbid  a  company,  transacting  industrial  insurance 
on  a  weekly  payment  plan,  from  returning  to  policyholders,  who 
have  made  premium  payments  for  a  period  of  at  least  one  year, 
directly  to  the  company  at  its  home  or  district  offices,  a  percentage 
of  the  premium  which  the  company  would  have  paid  for  the 
weekly  collection  of  such  premium. 

Source. — Farmer  §  89;  originally  revised  from  L.  1889,  chap.  228,  §  1,  as 
amended  by  L.  1890,  chap.  401. 

Amended  by  L.  1911,  chap.  249. 

Note.— The  amendment  by  L.  1911,  chap.  249,  provided  that  nothing  in  the 
Insurance  Law  shall  prevent  an  industrial  insurance  company  on  a  weekly 
payment  plan  from  returning  to  policyholders  who  have  made  premium  pay- 
ments for  a  period  of  at  least  one  year  direct  to  tlio  (M)nii>any,  the  part  of  tlio 
premium  which  the  company  would  have  paid  foi-  wcd^ly  collections. —  Ed^ 

See  S  1191,  Penal  Law.  Discriminations  and  rebates  by  life  insurance  com- 
panies prohibited. 

Section  89  is  not  limited  to  the  issues  m  this  state  of  a  life  insurance  cor- 
poration doing  business  in  this  state.    Ruling  Ins.  Dept.,  Nov.  16,  1909. 


§  89.  LiFE^  Health^  Casualty  Corporations.  143 

For  the  purposes  of  §  89  annuities  are  to  be  considered  as  insurance.  Rul- 
ing Ins.  Dept.,  May  1,  1912. 

LOTTERY. —  An  insurance  company  cannot  issue  policies  payable  in  an 
order  to  be  determined  by  lot.    Attorney -General  Rep.,  1892,  page  231. 

Chap.  282  of  1889,  from  which  this  section  is  in  part  derived,  was  held  to  be 
constitutional.     People  v.  Formosa,  131  N.  Y.,  478. 

COMMISSION. —  A  firm  of  brokers  may  place  life  insurance  on  a  member 
who  is  entitled  to  share  in  the  commission  as  a  general  firm  profit.  Ruling 
Ins'.  Dept.,  Jan.  2,   1912. 

A  corporation  may  accept  commissions  earned  by  memibers.  Ruling  Ins. 
Dept.,  July  1,  1913. 

Payment  of  commissions  to  sub-agents  for  the  purpose  of  remitting  tthe 
cost  of  insurance  constitutes  a  rebate.    Ruling  Ins.  Dept.,  August  4,  19Q8. 

The  acceptance  of  less  than  the  face  amount  of  a  note  in  payment  of  a 
premium  constitutes  a  rebate.     Ruling  Ins.  Dept.,  Dec.  17,  1914. 

Where  it  is  found)  that  an  agent  is  clearly  violating  the  law  prohibiting 
discrimination  he  will  be  proceeded  against.     Ruling  Ins.  Dept.,  June  16,  1911. 

The  payment  of  a  commission -to  an  agent  on  a  policy  on  bis  own  life 
written  by  a  company  not  represented  by  him  is  prohibited.  Ruling  Ins.  Dept., 
July  8,  1913. 

An  officer  of  an  insurance  company  may  insure  his  own  life  in  his  company, 
if  no  rebate  is  granted  or  commission  paid.    Ruling  Ins.  Dept.,  Dec.  3,  1906. 

A  bona  fide  agent  taking  out  a  policy  of  insurance  on  his  own  life  in  good 
faith  is  entitled  to  commissions  thereon.     Ruling  Ins.  Dept.,  Nov.  22,  1909. 

A  general  agent  may  not  legally  appoint  as  agent  a  man  in  another  line  of 
business,  at  the  same  time  write  his  application  for  insurance,  apply  for  state 
license,  and  allow  the  applicant  and  prospective  agent  the  full  first  year  com- 
mission on  his  policy.    Ruling  Ins.  Dept.,  January  18,  1909. 

The  object  of  §  89  is  to  require  life  insurance  companies  to  give  equal  terms 
to  be  fixed  in  the  policies  to  insurers  of  the  same  class,  and  to  give  special 
favor  to  no  one,  and  its  operation  is  directly  against  considerations  and  induce- 
ments to  a  contract  of  insurance  which  are  not  specified  in  the  policy.  McGee 
V.  Felter,  75  Misc.,  349. 

REBATE. —  A  note  accepted  in  payment  of  a  life  insurance  policy  without 
the  legal  interest  charge  is  equivalent  to  a  rebate.  Ruling  Ins.  Dept.,  May 
28,  1909. 

Any  arrangement  whereby  the  policyholder  does  not  pay  the  full  amount  of 
the  premium,  as  set  forth  in  the  policy,  is  a  rebate  within  the  meaning  of  the 
law.     Ruling   Ins.   Dept.,   April   7,   1915. 

The  act  of  an  authorized  agent  to  send  circular  letters  to  members  of  a 
church  and  solicit  insurance  on  the  condition  that  part  of  his  commissions  will 
be  turned  back  to  the  church  is  a  violation  of  the  spirit  if  not  the  letter  of 
§  89.    Ruling  Ins.  Dept.,  Oct.  24,  1910. 

It  would  be  a  violation  of  §  39  either  (1)  for  a  life  insurance  agent  to  sell  a 
policy  of  life  insurance  to  a  person  at  the  rate  stipulated  by  the  company  and 
to  collect  the  entire  premium  and  in  addition  to  give  without  cost  a  building 
lot  valued  at  $50  or  (2)  to  sell  a  policy  and  to  sell  such  lot  for  the  nominal 
charge  of  $1.00.    Ruling  Ins.  Dept.,  June  30,  1910. 


144  The  Insurance  Law.  §  89. 

Interest  collectible  on  premiums  after  the  expiration  of  the  grace  period. 
Ruling  Ins.  Dept.,  April  7,   1914. 

An  agent  may  not  buy  stock  of  insured's  corporation  in  consideration  of 
his  taking  out  a  life  policy.     Ruling  Ins.  Dept.,  Oct.  14,  1911. 

A  reduction  of  premium  guaranteed  in  a  policy  of  insurance  does  not  con- 
stitute a  rebate.    Ruling  Ins.  Dept.,  Dec.  9,  1911. 

A  policyholder  who  pays  and  an  agent  who  receives  less  than  the  full 
amount  of  the  premium  is  guilty  of  a  misdemeanor.  Ruling  Ins.  Dept.,  April 
7,  1915. 

A  life  company  which  does  business  direct  with  policyholders  through  the 
mail  may  provide  in  the  contract  for  a  reduction  of  premiums.  Ruling  Ins. 
Dept.,  Dec.    18,  1911. 

The  dating  back  of  a  life  insurance  policy  is  prohibited  by  the  provisions  of 
section  89.     Ruling  Ins.  Dept.,  Feb.  21,   1910. 

The  giving  of  a  new  policy  at  the  old  rate  of  five  years  previous  is  a 
discrimination.     Ruling  Ins.  Dept.,  Sept.  9^  1910. 

The  antedating  of  a  substituted  policy  without  increase  in  premium  is  not 
a  discrimination.     Ruling  Ins.  Dept.,  May  12,  1910. 

There  is  no  law  that  specifically  prohibits  the  antedating  of  a  policy. 
Ruling  Ins.  Dept.,  July  10,  1911. 

This  section  does  not  provide  a  specific  penalty  for  giving  rebate  which 
sihould  be  considered  exclusive,  but  simply  provides  the  manner  in  which  the 
Superintendent  of  Insurance  may  restrain  future  disobedience.  Equitable 
Trust  Co.  V.  Newman,  72  Misc.,  52. 

A  reduction  in  the  rate  of  premiums  charged  by  a  company  is  not  a 
rebate,  so  long  as  it  applies  to  all  applicants  for  insurance;  the  prohibitio^i 
of  section  89  is  against  discriminations.    Ruling  Ins.  Dept.,  May  9,  1911. 

It  is  not  a  violation  of  this  section  for  a  life  insurance  agent,  in  writing  a 
new  policy,  to  advance  and  pay  to  the  insuring  company  out  of  his  own  funds, 
the  full  first  year  premium  when  he  delivers  the  policy  to  the  insured  — 
taking  in  exchange  therefor  a  three  monthsi  noite  of  the  insured,  to  the  agent 
individually,  for  the  full  amount  advanced  with  interest  — '  the  same  being 
done  in  good  faith  and  without  any  qualifying  agreement.  Ruling  Ins. 
Dept.,  MarcTi  15,  1912. 

If  a  person  on  a  salary  such  as  a  clerk  or  Supervisor  of  Agents  is  allowed 
a  commission  on  a  policy  on  his  own  life,  it  is  a  rebate  unless  the  com- 
mission is  determined  in  advance  and  that  if  it  will  exceed  $5,000  for  any 
one  year,  the  contract  for  such  commission  is  passed  upon  by  the  board  of 
directors.     Ruling   of  Ins.   Dept.,   December   11,   1913. 

DATING  BACK. — A  new  policy  may  be  issued  in  place  of  one  allowed  to 
lapse  and  may  be  dated  back  as  many  years  as  premiums  were  paid  on  the 
original  policy.    Ruling  Ins.  Dept.,  May  19,  1910. 

Dating  back  of  a  policy,  to  give  the  insured  the  benefit  of  a  younger  age, 
is  clearly  discriminating  and  falls  within  the  prohibition  of  §  89.  Ruling 
Ins.  Dept.,  Oct.  27,  1909. 

Section  89  does  not  prohibit  dating  back  absolutely  but  does  prohibit  dis- 
criminations.   Ruling  Ins.  Dept.,  Nov.  11,  1909. 


§  89.  LiFE^  Health,  Casualty  Corporations.  145 

If  A  should  now  apply  to  Company  B  for  the  cancellation  of  his  five-year 
old  policy,  and  the  issue  of  a  new  one  in  lieu  thereof  on  the  company's  new 
form  with  same  date  of  entry  as  the  olo  policy,  and  the  company  should  grant 
his  request  and  give  him  the  new  policy  on  the  new  form  at  age  40,  at  the  old 
date  of  five  years  ago,  it  would  be  a  violation  of  §  89.  iRuling  Ins.  Dept., 
Sept.  9,  1910. 

SPECIAL  CONTRACTS.— "  Special  contracts,"  frequently  described  as 
"  board  contracts,"  are  prohibited  by  section  89  of  the  Insurance  Law  as 
amended  by  Laws  1906,  chapter  326.    Ruling  Ins.  Dept.,  November  6,  1908. 

The  employment  of  a  person  for  the  bona  fide  purpose  of  procuring  prospects 
would  not  in  itself  be  a  violation  of  §  89.    Ruling  Ins.  Dept.,  Jan.  4,  1910. 

INTEREST  ON  CHECKS.— In  regard  to  requiring  interest  on  checks 
tendered  in  payment  of  premiums  with  a  request  that  they  be  held. 
Insurance  Companies  should  be  governed  by  the  terms  of  the  grace  clause 
contained  in  the  policy  on  which  a  premium  is  to  be  paid.  Ruling  of  Ins. 
Dept.,  April  7,  1914. 

The  giving  of  tickets  or  chances  upon  a  building  lot  to  purchasers  of 
insurance  constitutes  a  rebate.     Ruling  Ins.  Dept.,  June  24,  1913. 

The  gift  of  a  gold  weddling  ring  to  prospective  policyholders  constitutes  a 
discrimination.     Ruling  Ins.  Dept.,  May  6,  1915. 

Renewable  term  rates  may  be  used  for  non-renewa.ble  term  insurance  on 
impaired  lives.    Ruling  Ins.  Dept.,  'May  20,  1907. 

DISORIMIN^ATIONS. —  The  word;  "class"  means  a  number  of  persons  hav- 
ing characteristics  in  common  as  occupation,  education  and  habits  of  life. 
Ruling  Ins.  Dept.,  April  26,  1907. 

Writing  lives  of  bank  official's  and  employees  as  a  class  at  a  lower  premium 
falls  within  the  prohibition  of  the  section.    Ruling  Ins.  Dept.,  May  20,  1907. 

The  new  $5,000  ordinary  life  policy  of  the  Metropolitan  Life  Insurance  Com- 
pany does  not  violate  the  provisions  of  this  section.  Ruling  Ins.  Dept.,  July 
19,  1909. 

Discriminations  in  cash  surrender  values  and  paid-up  insurance  on  lapsed 
policies  is  within  the  prohibition  of  this  section.  Ruling  Ins.  Dept.,  July  27, 
1909. 

The  failure  to  state  the  rate  of  interest  on  premiums  for  period  of  grace 
may  result  in  discrimination.    Ruling  Ins.  Dept.,  Aug.  7,  1909. 

There  is  no  discrimination  where  the  reserve  valtie  of  a  small  paid-up  policy 
is  applied  towards  purchase  of  new  insurance.    Ruling  Ins.  Dept.,  Sept.  1,  1909. 

Where  a  privilege  is  offered  to  every  applicant  there  is  no  discrimination. 
Ruling  Ins.  Dept.,  Dec.  12,  1910. 

Annual  premium  policies  may  not  be  paid  for  in  monthly  installments. 
Ruling  Ins.  Dept.,  Sept.  25,  1912. 

A  plan  to  insure  twelve  or  fourteen  members  of  a  trust  company  at  a  lower 
premium  is  not  a  rebate,  but  in  the  nature  of  group  insurance.  Ruling  Ins. 
Dept.,  Dec.  6,  1912. 

The  consideration  must  be  expressed  in  the  policy  contract.  Ruling  Ins. 
Dept.,  April  15,  1913. 


146  The  Insurance  Law.  §§  90,  91. 

§  90.    Discriminations  against  colored  persons  projiibited. 

No  life  insurance  corporation  doing  business  within  this  state 
shall  make  any  distinction  or  discrimination  between  white  persons 
and  colored  persons,  wholly  or  partially  of  African  descent,  as  to 
the  premiums  or  rates  charged  for  policies  upon  the  lives  of  such 
persons,  or  in  any  other  manner  whatever;  nor  shall  any  such 
corporation  demand  or  require  a  greater  premium  from  such 
colored  persons  than  is  at  that  time  required  by  such  corporation 
from  white  persons  of  the  same  age,  sex,  general  condition  of 
health  and  prospect  of  longevity;  nor  shall  any  such  corporation 
make  or  require  any  rebate,  diminution  or  discount  upon  the 
amount  to  be  paid  on  such  policy  in  case  of  the  death  of  such 
colored  persons  insured,  nor  insert  in  the  policy  any  condition, 
nor  make  any  stipulation  whereby  such  person  insured  shall  bind 
himself,  or  his  heirs,  executors,  administrators  and  assigns  to 
accept  any  sum  less  than  the  full  value  or  amount  of  such  policy 
in  case  of  a  claim  accruing  thereon  by  reason  of  the  death  of  such 
person  insured,  other  than  such  as  are  imposed  upon  white  persons 
in  similar  cases ;  and  any  such  stipulation  or  condition  so  made  or 
inserted  shall  be  void. 

Source. — Former  §  90;  originally  revised  from  L.  1891,  chap.  119,  §   1. 
See  §  1191,  Penal  Law.    Discriminations  and  rebates  by  life  insurance  cor- 
porations prohibitea. 

Life  insurance  corporations  doing  business  within  this  state  are  not  per- 
mitted to  make  any  discrimination  against  "  persons  wholly  or  partly  of 
African  descent."     Ruling  Ins.  Dept.,  Sept.  22,   1914. 

§  91.  Business  to  be  accepted  from  licensed  agents  only; 
agents'  certificate  of  authority. 

No  life  insurance  corporation  doing  business  within  this  state, 
or  agent  thereof,  shall  pay  any  commission  or  other  compensation 
to  any  person  for  services  in  obtaining  new  insurance,  unless  such 
person  shall  have  first  procured  from  the  superintendent  of  insur- 
ance a  certificate  of  authority  to  act  as  an  agent  of  such  company 
as  hereinafter  provided.  No  person  shall  act  as  agent,  sub-agent 
or  broker,  in  the  solicitation  or  procurement  of  applications  for 
insurance,  or  receive  for  services  in  obtaining  new  insurance  any 
commission  or  other  compensation  from  any  life  insurance  corpo- 
ration doing  business  in  this  state,  or  agent  thereof,  without  first 
procuring  n  certificate  of  authority  so  to  act  from  the  superin- 
tendent of  insurance,  which  must  be  renewed  annually  on  the  first 


§  91.  LiFE^  Health^  Casualty  Cohporations.  147 

clay  of  Jfiiiuarj,  or  within  six  months  thereafter.  Such  certificate 
Khali  be  i^snrd  by  the  superintendent  of  insurance  only  upon  the 
wTitten  application  of  persons  desiring  such  authority,  such  appli- 
cation being  approved  and  countersigned  by  the  company  such  per- 
son desires  to  represent,  and  shall  be  upon  a  form  approved  by  the 
superintendent  of  insurance,  giving  such  information  as  he  may 
require.  The  superintendent  of  insurance  shall  have  the  right  to 
refuse  to  issue  or  renew  any  such  certificate  in  his  discretion.  No 
such  certificate  shall  be  valid,  however,  in  any  event  after  the  first 
day  of  July  of  the  year  following  the  issuing  of  such  certificate. 
Renewal  certificates  may  be  issued  upon  the  application  of  the  com- 
pany. Such  certificate  of  authority  shall  be  executed  in  tripli- 
cate; one  copy  thereof  shall  be  filed  in  the  ofiice  of  the  superin- 
tendent, and  two  copies  thereof  shall  be  issued  to  such  agent, 
aubagent  or  broker,  one  of  which  copies  such  agent,  subagent  or 
broker  shall,  within  thirty  days  after  such  certificate  is  issued, 
cause  to  be  filed  in  the  ofiice  of  the  county  clerk  of  the  county  in 
which  such  agent,  subagent  or  broker  resides,  or,  if  a  non-resident, 
in  the  ofiice  of  the  county  clerk  of  the  county  in  this  state  in 
Avhich  he  has  an  office  for  the  transaction  of  business.  Agents 
operating  solely  for  companies  transacting  industrial  or  prudential 
insurance  on  the  weekly-payment  plan  of  insurance  are  exempted 
from  the  provisions  of  this  section,  and  nothing  contained  herein 
shall  be  construed  as  prohibiting  any  corporation  transacting  in- 
dustrial or  prudential  insurance  on  the  weekly-payment  plan  from 
accepting  business  on  the  plan  from  unlicensed  agents.  Any  per- 
son or  corporation  violating  the  provisions  of  this  section  shall 
forfeit  to  the  state  the  sum  of  five  hundred  dollars.  On  the  con- 
viction of  any  person  acting  as  agent,  subagent  or  broker,  of  the 
commission  of  any  act  which  is  a  violation  of  any  of  the  provisions 
of  this  chapter  the  superintendent  of  insurance  shall  immediately 
revoke  the  certificate  of  authority  issued  to  him  and  no  such  cer- 
tificate shall  thereafter  be  issued  to  such  convicted  person  by  the 
superintendent  within  three  years  from  the  date  of  his  conviction. 

Source.— Former  §  91,  as  amended  by  L.  1895,  chap.  995;  L.  1907,  chap.  623; 
originally  revised  from  L.  1851,  chap.  95,  §  3;  Ij.  1889,  chap.  282,  §§  1,  2,  as 
amended  by  L.  1890,  chap.  401. 

Amended  by  L.  1909,  chap.  301. 

Xote. —  The  amendment  by  L.  1900,  chap.  301,  clarified  the  provisions  of  the 
section  which  exempted  agents  doing  industrial  insurance  on  the  weekly  plan 
from  the  provisions  of  the  section  by  providing  that  corporations  doing  such 
business  may  accept  business  from  unlicensed  agents  who  are  operating  to  sell 
that  kind  of  insurance  only. —  Ed. 


148  The  Insurance  Law.  §  91. 

See  §  0,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without  certificate  of  authorization  by  superintendent. 

•See  §  29,  ante.  Copy  of  charter  of  verified  statement  to  be  filed  in  the  office 
of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  filed 
in  county  clerk's  office. 

See  §  32,  ante.    Renewal  of  certificate. 

See  §  49,  ante.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  50,  ante.    Agent's  certificate  of  authority. 
See  §  54,  ante.    Agents  not  to  act  for  unauthorized  corporations. 
See  §  137,  post.    License  to  agents  in  certain  cases. 

See  §  1192,  Penal  Law.  Acting  as  agent  of  life  insurance  corporation  with- 
out certificate  of  authority. 

OONSTITUTIONAL.— Section  91  which  provides  in  substance  that  no  life 
insurance  company  shall  pay  a  commission  unless  the  agent  has  procured 
authority  to  act  as  agent  and  that  such  authority  shall  be  issued  by  the 
superintendent  of  insurance  upon  a  form  approved  by  him  and  that  said  super- 
intendent may  "  refuse  to  issue  or  renew  such  certificate  in  his  discretion  " 
is  not  unconstitutional  on  the  theory  that  it  vests  the  superintendent  with 
arbitrary  power  to  prevent  a  person  from  pursuing  a  lawful  calling;  the  sec- 
tion may  be  construed  to  mean  that  the  superintendlent  is  clothed  with  power 
to  determine  w'hether  an  applicant  has  complied  with  the  statute  and  said 
construction,  which  renders  the  statute  constitutional,  will  be  adopted.  Stern 
v.  Metropolitan  Life  Insurance  O).,  169  App.  Div.,  217;  aff' d  217  N.  Y.  (Mem.). 

AGENT'S  AUTHORITY.— It   was   apparently   the   legislative   intent   that 

agents  soliciting  insurance,  other  than  industrial  or  prudential  on  the  weekly 
payment  plan,  should  secure  a  certificate  of  authority  therefor  from  the 
superintendent  of  insurance.    Attorney-General  Rep.,  1897,  page  207. 

The  payment  by  a  company  of  a  commission  on  account  of  business  secured 
in  the  State,  to  a  manager,  who  does  not  hold  a  New  York  life  agent's  cer- 
tificate of  authority,  and  who  does  not  participate  in  any  way  in  securing 
the  application  for  insurance,  is  a  violation  of  this  section.  Ruling  Ins.  Dept., 
Feb.  17,  1912. 

Agents  of  life  insurance  cltib  on  neighborhood  plan  must  procure  certificates 
of  authority.     Attorney-General  Rep.,  March  10,  1904. 

Field  canvassers  and  office  help  obtaining  birthdays  and  insurance  informa- 
tion must  be  licensed  agents.    Ruling  Ins.  Dept.,  June  23,  1909. 

Any  unauthorized  company  may  pkce  insurance  on  life  of  a  citizen  pro- 
vided the  contract  is  made  direct  with  the  company.  Ruling  Ins,  Dept.,  Sept. 
21,  1911. 

An  actuary  acting  as  adviser  must  have  agent's  certificate.  Ruling  Ins. 
Dept.,  Oct.  1,  1912. 

Each  of  the  persons  composing  a  firm  must  make  individual  application  to 
be  licensed  as  life  agents.     Ruling  Ins.  Dept.,  June  18,  1913. 


§  91-a.        Ljfe^  Health^  Casualty  Corpobations.  149 

ANNUITIES. — Annuities  may  be  issued  without  the  services  of  a  licensed 
agent  on  the  application  of  any  person  interested  so  long  as  no  commission 
is  allowed  for  the  consideration  received.    Ruling  Ins.  Dept.,  July  29,  1909. 

There  is  no  prohibition  in  the  Insurance  Law  against  an  insurance  com- 
pany or  other  corporation  authorized  to  do  an  annuity  business  from  paying 
commissions  or  compensation  for  such  business  to  persons  not  licensed.  Ruling 
Ins.  Dept.,  March  7,  1912. 

COMMISSION. —  A  person  cannot  accept  lawfully  commission  on  a  life 
insurance  policy  on  his  own  life  which  is  written  by  a  company  wihioh  he 
does  not  represent.     Ruling  Ins.  Dept.,  July   8,   1913. 

If  the  contracts  of  the  members  of  ^  a  corporation  with  the  corporation 
provide  for  the  turning  in  of  commissions  on  life  business  produced,  there  is 
no  reason  why  such  commissions  on  such  business  may  not  be  turned  over 
to  such  corporation,  provided,  however,  that  this  w^ould  not  apply  to  business 
written  on  the  life  of  any  member  of  the  corporation.  Ruling  Ins.  Dept., 
July  1,  1913. 

A  licensed  agent  may  not  share  commissions  with  a  non-resident  agent 
wiio  does  not  hold  a  license.     Ruling  Insi.  Dept.,  Oct.  25,  1911. 

A  New  York  agent  may  not  sihare  commissions  with  a  non-licensed  foreign 
agent  procuring  prospects.     Ruling  Ins.   Dept,,  Nov.  25,  1912. 

A  life  agent  may  not  share  comanissions  with  a  broker  licensed  under 
section   143.     Ruling  Ins.  Dept.,  Oct.  3,  1914. 

An  agent  may  not  share  commissions  with  the  insured.  Ruling  Ins,  Dept., 
Dec.  29,  1914. 

The  superintendent  'has  discretionary  power  to  issue  or  refuse  to  issue  a 
license  to  an  agent.    Ruling  Ins.  Dept.,  April  18,  1910. 

§  91-a.    Agents  for  health  or  accident  insurance. 

1^0  corporation  transacting  the  business  of  health  and  accident 
insurance  within  this  state,  or  agent  thereof,  shall  pay  any  commis- 
sion or  other  compensation  to  any  person,  partnership,  association 
or  corporation,  except  to  a  broker  duly  authorized  under  the  pro- 
visions of  section  one  hundred  and  forty-three  of  this  chapter, 
for  services  in  obtaining  new  insurance  or  in  collecting  premiums 
from  policyholders  in  this  state,  unless  such  person,  partnership, 
•association  or  corporation  shall  have  first  procured  from  the 
superintendent  of  insurance  a  certificate  of  authority  to  act  as  an 
agent  of  such  corporation  as  hereinafter  provided.  I^o  person, 
i  partnership,  association  or  corporation  shall  act  as  agent  in  the 
solicitation  or  procurement  in  this  state  of  applications  for  health 
and  accident  insurance  or  in  the  collection  of  premiums  for  such 
insurance,  or  receive  for  such  services  any  commission  or  other 


150  The  Insurance  Law.  §  91-a. 

compensation  from  any  corporation  transacting  the  business  of 
health  and  accident  insurance  in  this  state,  or  agent  thereof,  with- 
out first  procuring  a  certificate  of  authority  so  to  act  from  the 
superintendent  of  insurance  which  must  be  renewed  annually. 

Before  any  agent's  certificate  of  authority  shall  be  issud  by 
the  superintendent  of  insurance  pursuant  to  this  section,  there 
shall  be  filed  in  his  ofiice:  (1)  A  written  application  by  the 
person,  partnership,  association  or  corporation  desiring  such  au- 
thority which  shall  be  in  the  form  or  forms  and  supplements 
thereof  prescribed  by  the  superintendent  of  insurance  and  con- 
tain such  information  as  he  may  require.  (2)  A  certificate  by 
the  corporation  desiring  to  employ  the  applicant  as  agent,  duly 
verified  by  one  of  its  executive  officers  or  managing  agents,  that 
such  corporation  has  duly  investigated  the  character  and  record 
of  the  applicant  and  has  satisfied  itself  that  he  is  trustworthy  and 
competent  to  act  as  its  agent.  The  superintendent  of  insurance 
may  refuse  to  issue  or  renew  and  may  revoke  any  such  certificate 
for  cause,  which  shall  include  violations  of  the  insurance  law 
and  fraudulent  practices,  provided  that  no  such  action  shall  be 
taken  without  an  investigation  and  a  hearing  either  before  the 
superintendent  or  before  a  salaried  employee  of  the  insurance 
department  designatd  for  that  purpose,  whose  report  the  super- 
intendent may  adopt.  Every  such  corporation  shall,  upon  the 
termination  of  the  employment  of  any  agent  for  the  solicitation 
of  health  and  accident  insurance  in  this  state  or  the  collection 
of  premiums  therefor,  forthwith  file  with  the  superintendent  of 
insurance  a  statement  of  the  facts  relative  to  the  employment  of 
such  agent  and  the  termination  of  such  employment  and  the  cause 
thereof. 

Every  such  certificate  shall  expire  upon  the  termination  of  the 
employment  of  the  agent  by  the  corporation  for  which  he  is 
authorized  to  act  as  agent,  or  in  any  event,  on  the  thirty-first 
day  of  December  of  the  calendar  year  in  which  the  same  shall 
have  been  issued,  provided,  however,  if  an  application  for  the 
renewal  of  any  such  certificate  shall  have  been  filed  with  the 
superintendent  of  insurance  before  January  first  of  any  year, 
such  agent  may  continue  to  act  as  such  under  such  expired  cer- 
tificate until  the  issuance  to  him  by  the  superintendent  of  insur- 


g  92.  LiFE^  Health^  Casualty  Corpoeations.  151 

aiice  of  a  new  certificate  or  until  ^ve  days  after  the  superintendent 
of  insurance  shall  have  refused  to  issue  such  certificate  and  shall 
have  served  notice  of  such  refusal  on  such  agent.  Service  of  such 
notice  may  be  made  either  personally  or  by  mail,  and,  if  by  mail, 
shall  be  deemed  complete  if  such  notice  is  deposited  in  the  post- 
office,  postage  prepaid,  directed  to  the  applicant  at  the  place  of 
residence  or  business  specified  in  his  application. 

Added  by  L.  1914,  chap.  14.     In  effect  February  26,  1914. 

Note. — Section  2  of  chap.  14,  L.  1914,  further  provides: 

This  act  shall  take  effect  on  the  first  day  of  July,  nineteen  hundred  and 
fourteen,  provided  that  any  person,  partnership,  association  or  corporation, 
acting  as  the  agent  in  this  state  of  any  corporation  transacting  the  business 
of  health  and  accident  insurance,  who  or  which  shall  or  may  have  procured  a 
certificate  of  authority  to  act  as  agent  of  such  corporation  under  and  pur- 
suant to  the  provisions  of  section  one  hundred  and  forty-two  of  this  chapter 
prior  to  the  said  first  day  of  July,  nineteen  hundred  and  fourteen,  shall  not 
be  required  to  make  application  for  a  certificate  of  authority  hereunder  for 
the  year  nineteen  hundred  and  fourteen,  and  that,  if  such  agent,  so 
authorized,  shall  apply  for  a  certificate  of  authority  to  act  as  agent  pursuant 
to  this  section  prior  to  the  first  day  of  January,  nineteen  hundred  and  fifteen, 
such  agent  may  continue  to  act  as  such  under  such  expired  certificate  until 
the  issuance  to  him  or  it  by  the  superintendent  of  insurance  of  a  certificate 
thereunder  or  until  five  days  after  the  superintendent  of  insurance  shall 
have  refused  to  issue  such  certificate  and  shall  have  served  notice  of  such 
refusal  in  the  manner  above  provided. 

§  92.    No  forfeiture  of  policy  witiiout  notice. 

'No  life  insurance  corporation  doing  business  in  this  state  shall 
within  one  year  after  the  default  in  payment  of  any  premium, 
installment  or  interest  declare  forfeited,  or  lapsed,  any  policy  here- 
after issued  or  renewed,  and  not  issued  upon  the  payment  of 
monthly  or  weekly  premiums,  or  unless  tlie  same  is  a  term  insur- 
ance contract  for  one  year  or  less,  nor  shall  any  such  policy  be 
forfeited,  or  lapsed,  by  reason  of  nonpayment  when  due  of  any 
premium,  interest  or  installment  or  any  portion  thereof  required 
by  the  terms  of  tlie  policy  to  be  paid,  within  one  year  from  the 
failure  to  pay  such  premiimi,  interest  or  installment,  unless  a  writ- 
ten or  printed  notice  stating  the  amount  of  such  premium,  interest, 
installment,  or  portion  thereof,  due  on  such  policy,  the  place  where 
it  shall  be  paid,  and  the  person  to  whom  the  same  is  payable,  shall 
have  been  duly  addressed  and  mailed  to  the  person  whose  life  is 


152  The  Insurance  Law.  §  92. 

insured,  or  tlie  assignee  of  tlie  policy,  if  notice  of  the  assignment 
has  been  given  to  the  corporation,  at  his  last  known  post- 
office  address  in  this  state,  postage  paid  by  the  corporation,  or  by 
any  officer  thereof,  or  person  apjwinted  by  it  to  collect  such  pre- 
mium, at  least  fifteen  and  not  more  than  forty-five  days  prior  to 
the  day  when  the  same  is  payable.  The  notice  shall  also  state  that 
unless  such  premium,  interest,  installment  or  portion  tliereof,  then 
due,  shall  be  paid  to  the  corporation,  or  to  the  duly  appointed  agent 
or  person  authorized  to  collect  such  premium  by  or  before  the  day 
it  falls  due,  the  policy  and  all  paym.ents  thereon  will  become  for- 
feited and  void  except  as  to  the  right  to  a  surrender  value  or 
paid-up  policy  as  in  this  chapter  provided.  If  the  payment  de- 
manded by  such  notice  shall  be  made  within  its  time  limited  there- 
for, it  shall  be  taken  to  be  in  full  compliance  with  the  requirements 
of  the  policy  in  respect  to  the  time  of  such  payment ;  and  no  such 
policy  shall  in  any  case  be  forfeited  or  declared  forfeited,  or  lapsed, 
until  tlie  expiration  of  thirty  days  after  the  mailing  of  such  notice. 
The  affidavit  of  any  officer,  clerk,  or  agent  of  the  corporation,  or  of 
any  one  authorized  to  mail  such  notice  that  the  notice  required 
by  this  section,  has  been  duly  addressed  and  mailed  by  the  corpo- 
ration issuing  such  policy  shall  be  presumptive  evidence  that  such 
notice  has  been  duly  given.  'No  action  shall  be  maintained  to 
recover  under  a  forfeited  policy,  unless  the  same  is  instituted 
within  two  years  from  the  day  upon  which  default  was  made  in 
paying  the  premium,  installment,  interest  or  portion  thereof  foi 
which  it  is  claimed  that  forfeiture  ensued. 

Source.— Former  §  92,  as  amended  by  L.  1897,  chap.  218,  and  L.  1906, 
chap.  326;  originally  revised  from  L.  1876,  chap.  341,  §  1,  as  amended  by  L. 
1877,  chap.  321,  and  §  2. 

See  §  210,  post.    Notice  of  assessment  by  co-operative  companies. 

See  Personal  Property  Law,  §  15,  as  amended  by  L.  1911,  chap.  327,  as  to 
proceeds  of  life  insurance  policy  under  a  trust  with  an  insurance  company. 

§  92  of  the  Insurance  Law,  relating  to  forfeitures  of  policies  of  life  insur- 
ance and  prohibiting  same  without  notice,  construed.  Liesny  v.  Metropolitan 
Life  Insurance  Co.,  86  Misc.,  650. 

EFFECT  OF  SECTION.—  This  section  allows  to  the  holder  of  a  policy  of  life 
insurance,  who  has  defaulted  in  the  payment  of  his  premiums,  a  year  of 
grace  during  which  to  pay  the  premiums  and  become  reinstated,  only  where 
the  insurance  company  has  neglected,  before  the  due  day,  to  give  the  statutory 
notice  of  the  time  when  the  premium  became  due,  or,  after  the  due  day,  has 


§  92.  LiFE^  Health^  Casualty  Coepoeations.  153 

failed  to  require  payment  at  a  fixed  date  within  the  year;  if  the  insurance 
company  gives  the  necessary  notice  no  grace  is  allowed.  Schnell  v.  Mut.  L. 
Ins.  Co.,  53  App.  Div.,  172. 

The  mailing  of  the  notice  of  forfeiture  may  be  shown  by  the  direct  testi- 
mony of  agents  authorized  to  mail  such  notice,  although  there  were  many 
agents  engaged  in  the  various  steps  of  mailing  notices;  the  requirement  of 
section  92  is  satisfied  if  the  notice  be  mailed  whether  actually  received  by  the 
insured  or  not.    Wolarsky  v.  N.  )[.  Life  Ins.  Co.,  120  App.  Div.,  99. 

Section  92,  forbidding  forfeiture  of  policies  within  one  year  from  default 
unless  notice  has  been  mailed  to  the  insured  at  his  last  known  post-office 
address  in  this  state,  is  applicable  only  to  persons  having  a  known  post-office 
address  in  this  state;  §  312  (now  repealed),  requiring  notice  to  the  insured, 
applied  only  to  "  stipulated  premium  "  policies  or  to  companies  incorporated 
as  stipulated  premium  companies  and  was  not  to  be  read  in  connection  with 
I  92  or  to  be  taken  as  extending  its  provisions.  Napier  v.  The  Bankers' 
Life  Ins.  Co.,  51  Misc.,  283. 

The  provisions  of  §  92  apply  to  and  govern  a  policy  issued  and  to  be  per- 
formed in  New  York,  though  the  assured  resides  in  another  state.  Equitable 
Life  Assur.  Soc.  v.  Nixon,  81  Fed.  Rep.,  796. 

The  provision  in  the  statutes  of  New  York  that  "no  life  insurance  com- 
pany doing  business  in  the  state  of  New  York  shall  have  power  to  declare 
forfeited  or  lapsed  any  policy  hereafter  issued  or  renewed,  by  reason  of  non- 
payment of  any  annual  premium,  or  interest,  or  any  portion  thereof,  except 
as  hereinafter  provided,"  does  not  apply  to  or  control  such  a  policy  issued  by 
a  corporation  of  New  York  in  another  state,  in  favor  of  a  citizen  of  the 
latter  state,  but  is  applicable  only  to  business  transacted  within  the  state  of 
New  York;  and  in  such  case  the  rights  of  the  parties  are  measured  by  the 
terms  of  the  contract.    Mut.  Life  Ins.  Co.  v.  Cohen,  179  U.  S.,  262. 

SUBSTANTIAL  COMPLIANCE.— To  enable  a  life  insurance  company  to 
avail  itself  of  the  provisions  of  section  92,  permitting  the  forfeiture  of  a 
policy,  it  must  substantially  comply  with  all  the  terms  of  the  statute  though 
the  notice  to  be  mailed  need  not  literally  follow  the  words  of  the  statute. 
The  failure  to  state  in  said  notice  that  the  person  named  therein  as  defend- 
ant's general  agent  was  the  duly  appointed  agent  to  collect  the  premium,  and 
that  it  should  be  paid  before  a  certain  date  is  not  a  substantial  compliance 
with  the  statute.    Flint  v.  Provident  Life  &  Trust  Co.,  76  Misc.,  673. 

PAYMENTS. —  The  duration  and  validity  of  a  policy,  whatever  may  be  its 
terms,  is  not  dependent  upon  payment  of  premium  on  the  day  named,  but  upon 
payment  within  thirty  days  after  notice  is  given;  the  statute  is  part  of  the 
contract,  and  governs  the  rights  and  obligations  of  the  parties,  the  same  as  if 
all  its  terms  and  conditions  had  been  incorporated  therein.  Baxter  v.  Brooklyn 
L.  Ins.  Co.,  119  N.  Y.,  450. 

When  one  holding  a  term  life  insurance  policy  has  an  option  to  change  it 
for  a  straight  life  insurance  policy  at  a  diflFerent  rate,  on  failure  of  the 
insured  to  pay  three  premiums  on  the  new  policy,  it  lapses.  McGuire  v. 
Union  Mut.  Life  Ins.  Co.,  114  App.  Div.,  344. 

Mere  proof  of  non-payment  of  premiums  when  due  will  not  defeat  an  action 
upon  a  policy,  unless  coupled  with  proof  of  the  service  of  the  notice  of  for 
feiture  required  by  section  92.  Auspitz  v.  Equitable  Life  Assurance  Co.,  62 
Misc.,  469. 


154  The  Insurance  Law.  §  92. 

Where  a  life  insurance  policy  for  one  month  provides  for  its  renewal  for 
each  successive  month  upon  payment  of  premiums  provided  to  be  paid,  viz.,  on 
the  first  day  of  each  year  from  the  date  of  the  policy  of  an  expense  premium, 
and  also  for  the  payment,  within  thirty  days  after  the  notice  of  a  demand 
therefor,  of  mortuary  premiums,  the  timely  payment  of  the  expense  premium 
does  not  operate  to  continue  the  policy  in  force  to  the  end  of  the  month  in 
wihich  a  mortuary  premium  not  paid  falls  due;  the  payment  of  such  mor- 
tuary premium  is  not  simply  a  condition  precedent  to  the  right  to  renew 
the  policy  for  the  succeeding  month;  such  a  policy  falls  within  the  exception 
stated  in  this  section,  requiring  that  notice  be  given  to  the  insured  before  his 
policy  can  be  forfeited.    Baldwin  v.  Provident  Life  Assur.  Soc,  23  App.  Div.,  5. 

FRATERNAL  BENEFIT  SOCIETY.— Chap.  341  of  1876,  as  amended  by 
chap.  321  of  1877,  requiring  notice  to  be  given  of  the  time  when  assessments 
are  payable,  was  repealed  by  chap.  690  of  1892,  and,  by  virtue  of  the  provi- 
sions of  §  233  of  that  act,  fraternal  benefit  societies  are  now  exempted  from 
the  necessity  of  giving  such  a  notice.  Bopple  v.  Supreme  Tent  of  Macabees, 
18  App.  Div.,  488. 

ASSESSMENT  COMPANY. —  This  section  does  not  apply  to  assessments  of 
an  assessment  insurance  company,  but  such  assessments  are  governed  by  §  210 
of  the  Insurance  Law.     Greenwald  v.  United  L.  Ins.  Assn.,  18  Misc.,  91. 

RENEWAL. —  The  payment  of  each  annual  premium  constitutes  a 
"renewal"  of  a  policy  within  the  meaning  of  this  section;  this  section,  there- 
fore, applies  to  a  policy  issued  before  the  passage  of  the  act,  but  renewed 
thereafter  by  the  payment  of  premiums  as  they  fell  due.  Carter  v.  B.  L. 
Ins.  Co.,  110  N.  Y.,  15. 

When  the  insurance  company  accepts  a  premium  after  it  has  become  due 
and  payable,  the  company  revives  and  reinstates  the  policy  from  the  time  the 
payment  is  made.     Wyman  v.  Phoenix  Mut.  L.  Ins.  Co.,  45  Hun,  184. 

MORTALITY  ASSESSMENTS.— Under  chap.  321  of  1877,  providing  that 
before  a  forfeiture  of  a  life  policy  can  be  declared  for  non-payment  of  princij)al 
or  interest,  notice  must  be  mailed  to  the  holder,  it  was  held  that  it  applied 
only  to  premiums  or  interest  payable  at  stated  intervals,  not  to  mortality 
assessments.    Merriman  v.  K.  M.  B.  Ass'n,  138  N.  Y.,  116. 

NOTICE. —  Notice  to  the  person  insured  is  sufficient;  notice  need  not  be 
given  to  a  beneficiary.    Rowe  v.  Brooklyn  L.  Ins.  Co.,  11  App.  Div.,  532. 

A  notice  to  the  insured  under  section  02,  which  fails  to  state  that  the  policy 
will  become  forfeited  if  payment  is  not  made  "  by  or  before  the  date  it  falls 
due  "  is  not  sufficient  to  authorize  a  forfeiture  for  non-payment  of  the  pre- 
mium.    Flint  V.  Provident  Life  &  Trust  Co.,  215  N.  Y.,  254. 

A  notice  which  contains  statements  reminding  the  assured  of  the  time  and 
place  when  and  where  to  make  any  payments  required  by  the  terms  of  the 
contract,  the  amount  thereof  and  the  effect  of  non-payment,  is  sufficient, 
although  it  does  not  follow  literally  the  words  of  the  statute.  McDougall  v. 
Provident  Sav.  Soc,  135  N.  Y.,  551. 

Where  the  notice,  after  stating  the  amount  of  the  premium,  the  time  when 
it  would  fall  due,  where  it  was  to  be  paid,  and  that  the  conditions  of  the 
policy  required  payment  to  be  made  on  or  before  the  premium  is  due,  added,^ 
"  and  members  neglecting  so  to  pay  are  carrying  their  own  risks,"  and,  as  a 
postscript,  "  prompt  payment  is  necessary  to  keep  your  policy  in  force,"  and 
there  was  no  statement  that  if  payment  was  not  made  the  policy  would 


§  92.  LiFE^  Health^  Casualty  Corporations.  155 

"  become  forfeited  and  void,"  such  notice  was  not  a  compliance  with  the 
requirements  of  the  statute  and  was  insufficient  to  work  a  forfeiture.  Phelan 
V.  Northwestern  Mut.  L.  Ins.  Co.,  113  N.  Y.,  147. 

Although  §  92  of  the  Insurance  Law  makes  the  affidavit  of  the  person 
mailing  the  notice  of  forfeiture  of  the  policy  presumptive  evidence  of  such 
mailing,  such  affidavit  made  in  a  foreign  state  is  insufficient  to  establish 
the  mailing  of  the  notice  in  opposition  to  testimony  that  it  was  never 
received,  unless  the  official  character  of  the  notary  is  authenticated;  §  92 
prevents  the  forfeiture  of  the  policy  during  the  thirty-day  period.  Carr  v. 
Prudential  Ins.  Co.,  115  App.  Div.,  755. 

A  notice  which  states,  "  if  your  payment  should  not  be  made  when  due, 
your  policy  will  cease  to  be  in  force "  is  not  sufficient ;  unless  good  reasons 
for  a  departure  therefrom  appear,  a  strict  compliance  on  the  part  of  insur- 
ance corporations  with  the  words  of  the  statute  is  necessary  to  legalize  the 
forfeiture  or  lapse  of  a  policy.  Schad  v.  Security  Mut.  Life  Assoc,  11  App. 
Div.,  487. 

In  an  action  to  recover  upon  a  life  insurance  policy,  it  is  error  to  charge 
that  even  though  there  was  a  defauLt  in  the  payment  of  premium,  the  verdict 
must  be  for  the  plaintiff,  if  the  notice  of  the  date  for  payment  was  not  given 
as  provided  by  section  92,  for  the  reason  that  under  the  statute  then  in  force, 
the  policy  became  forfeited  and  lapsed  one  year  after  default  in  the  payment 
of  the  premium,  even  though  the  notice  required  by  said  section  92  had  not 
been  served.     Liesny  v.  Metropolitan  Life  Insurance  Co.,  166  A.  D.,  625. 

When  the  notice  required  by  the  statute  is  served  before  the  premium  Is 
due,  no  further  notice  is  required.     Conway  v.  P.  M.  Tj.  Ins.  Co.,  140  N.  Y.,  79. 

It  is  an  essential  prerequisite  for  a  life  insurance  company,  which  seeks  to 
declare  forfeited  a  policy  issued  by  it,  to  establish  that  the  notice  required 
by  §  92  was  mailed  to  the  insured.  Howell  v.  Hancock  Mut.  Life  Ins.  Co., 
107  App.  Div.,  200. 

A  life  insurance  company  which  accepts  a  premium  note  under  an  agreement 
that  the  policy  shall  become  void  if  the  note  is  not  paid,  after  having  given 
notice  of  the  date  when  the  premium  became  due,  is  not  obliged  to  give  a 
similar  notice  respecting  the  maturity  of  the  not^  in  order  to  declare  a  for- 
feiture of  the  policy;  where  an  insured  dies  within  six  months  after  his  policy 
lapsed,  the  beneficiary  is  entitled  to  the  protection  of  §  88  of  the  Insurance 
Law,  which  provides  for  the  continuation  of  the  policy  for  such  period  of  insur- 
ance as  may  be  purchased  by  any  reserve  without  making  the  demand  men- 
tioned in  said  law,  or  exercising  the  option  to  continue  the  policy;  a  demand 
and  the  exercise  of  the  option  provided  for  by  the  policy  is  necessary  only 
where  the  insured  lives  for  the  six  months  following  the  forfeiture.  Bar- 
tholomew V.  Security  Mutual  Life  Insurance  Co.,  140  App.  Div.,  88;  204 
N.  Y.,  649. 

Notice  is  not  required  under  §  92  of  the  Insurance  Law,  prior  to  notes 
becoming  due  which  are  given  for  a  premium,  when  the  statutory  notice  has 
been  given  as  required  thereby  prior  to  the  premium  becoming  due.  O'Brien 
V.  Union  Central  Life  Ins.  Co.,  207  N.  Y.,  180;  aft''g  140  App.  Div.,  362. 

INSUFFICIENT  NOTICE.—  A  notice  under  this  section  is  insufficent  where 
its  form,  its  verbiage,  its  surplusage,  its  suggestions,  intimations  and  advice, 


156  *  The  Insurance  Law.  §  92. 

intermingled  with  the  language  of  the  statute,  are  all  repugnant  to  directness 
and  simplicity.  The  notice  is  intended  to  be  a  "  danger  signal "  but  here  it 
is  confused  with  a  dozen  other  signals.  McCormack  v.  Securities  Mutual  Life 
Insurance  Co.,   161  App.  Div.,  33. 

CONTENTS  OF  AFFIDAVIT.— The  affidavit  which  this  section  declares 
shall  be  presumptive  evidence  that  the  notice  has  been  duly  given,  should 
show  to  the  court  the  contents  of  the  notice  in  order  that  the  court  may 
determine  whether  the  notice  sent  complied  with  the  requirements  of  the 
statute;  an  affidavit  which  does  not  identify  the  particular  policy  to  which 
the  notice  related  is  ineffective.  McCall  v.  Prudential  Ins.  Co.,  98  App. 
Div.,  225. 

QUESTION  OF  FACT.— What  proof  as  to  the  mailing  of  such  notice  pre 
aents  a  question  of  fact  for  the  jury.  Howell  v.  Hancock  Mut.  L.  Ins.  Co., 
107  App.  Div.,  201. 

PLEADING. —  Evidence  of  service  of  the  notice  required  by  this  section  is 
inadmissible  unless  service  of  notice  is  pleaded.  Fischer  v.  Met.  L.  Ins. 
Co.,  167  N.  Y.,  178. 

When,  in  an  action  on  a  policy,  the  insurance  company  seeks  to  interpose 
the  defense  that  the  policy  is  forfeited  for  non-payment  of  premiums,  it  is 
bound  to  allege  and  prove  both  that  the  premium  was  not  paid,  and  that  the 
notice  required  by  the  statute  had  been  served  more  than  thirty  days  before 
the  policy  had  been  declared  forfeited.  Fischer  v.  Metropolitan  L.  Ins. 
Co.,  37  App.  Div.,  575. 

BURDEN  OF  PROOF.— The  burden  of  proving  that  the  notice  has  been 
served  rests  upon  the  insurance  company,  and  the  insured  is  not  required 
to  allege  the  failure  of  the  insurance  company  to  serve  it  in  the  complaint. 
Baxter  v.  Brooklyn  L.  Ins.  Co.,  44  Hun,  184. 

WAIVER  OF  FORFEITURE.— In  the  absence  of  any  agreement  a  waiver 
of  forfeiture  of  a  policy  of  life  insurance  results  only  from  negotiations  or 
transactions  with  the  insured,  by  which  the  insurer,  after  knowledge  of  the 
forfeiture,  recognizes  the  continued  existence  of  the  policy,  or  does  acts  based 
thereon,  or  requires  the  insured  by  virtue  thereof  to  do  some  act  or  incur 
some  expense  or  trouble.    Ronald  v.  M.  R.  F.  L.  Assn.,  132  N.  Y.,  378. 

It  is  within  the  general  powers  of  the  secretary  of  a  life  insurance  company 
to  waive  prompt  payment  of  premiums  about  to  fall  due  on  one  of  its  policies, 
and  the  valid  exercise  of  his  power  in  this  respect  does  not  depend  upon  the 
particular  place  where  he  may  be  at  the  time.  Hastings  v.  B.  I.  Ins.  Co., 
138  N.  Y.,  473. 

The  statute  of  New  York  prescribing  the  condition  upon  which  a  life 
insurance  policy  may  be  forfeited  for  the  non-payment  of  a  premium  is  man' 
datory,  and  its  provisions  may  not  be  waived  by  either  or  both  parties. 
Ruling  Ins.  Dept.,  June  2,  1909. 

MODIFICATION  OF  TERMS.— It  is  competent  for  the  parties  to  modify 
the  terms  of  the  original  contract  with  respect  to  the  time  of  payment  and 
the  effect  of  a  failure  to  make  punctual  payments,  and  when  such  an  agree- 
ment exists  a  forfeiture  does  not  work  on  account  of  it.  DeFrece  v.  Nat.  L. 
Ins.  Co.,  136  N.  Y.,  144. 

A  company  may  not  omit  the  "grace  clause"  in  policies  on  the  monthly 
payment  plan.    Ruling  Ins.  Dept.,  May  9,  1907. 


§§  93,  94.        Life,  Health,  Casualty  Corporations.        157 

The  assignment  of  a  policy  is  effective  'between  the  parties  without  notice 
to  the  company.     Ruling  Ins.  Dept.,  Aug.  9,  1909. 

An  attempt  to  limit  the  time  for  action  on  a  policy  to  one  year  is  pro- 
hibited.    Ruling  Ins.  Dept.,  Aug.  3,  1909. 

DEATH  OF  MEMBER.— Where  the  holder  of  a  mutual  benefit  certificate 
dies  after  he  has  been  notified  of  an  assessment,  but  before  the  time  allowed 
for  its  payment,  his  failure  to  pay  does  not  forfeit  the  certificate;  though  the 
holder  may  have  failed  to  pay  an  assessment  which  he  was  notified  to  pay, 
the  certificate  is  not  forfeited  if  the  notice  did  not  state  that  unless  it  was 
paid  the  certificate  would  be  forfeited.  Elmer  v.  Mut.  Benefit  L.  Assn., 
*  19  N.  Y.  Supp.,  289. 

NOTE. —  A  foreign  life  insurance  company,  which  has  due  notice  of  the 
assignment  of  a  policy  issued  by  it  in  this  state,  cannot  forfeit  the  policy 
for  a  failure  to  pay  the  premium,  without  giving  the  assignee  the  notice  to 
pay  and  of  the  intention  to  forfeit  if  not  paid;  and  the  fact  that  part  of  the 
premium  when  due  was  paid  in  cash  and  the  balance  by  the  assignee's  note, 
reciting  that  default  in  payment  would  render  the  policy  void,  does  not,  in 
the  absence  of  the  statutory  notice  of  the  maturing  premium,  entitle  the 
company  to  insist  upon  a  forfeiture  for  the  non-payment  of  the  note  at 
maturity.     Strauss  v.  Union  Cen.  L.  Ins.  Co.,  170  N.  \'.,  349. 

§  93.    Valuation  of  policies  of  health  insurance. 

The  superintendent  of  insurance  shall  make  annual  valuations 
of  the  policies  of  any  company,  insuring  against  disablement  be- 
cause of  sickness,  on  the  net  premium  basis,  according  to  the 
British  Friendly  Society  Tables  (eighteen  hundred  and  seventy- 
six,  eighteen  hundred  and  eighty)  and  with  interest  at  tliree  and 
one-half  per  centum  per  annum.  He  may  in  his  discretion  vary 
the  standard  in  particular  cases  and  may  also  require  additional 
rescn^es  because  of  hazardous  occupations,  impairment  of  the  live? 
of  the  insured  or  insufficient  net  premiums.  This  provision  shall 
not  apply  to  jxdicies  insuring  against  s])ecified  diseases  only  and 
for  not  longer  than  one  year  v^rithout  privileges  or  renewal. 
Source.— Former  §  93,  as  added  by  L.  1901,  chap.  635. 

§  94.    Election  of  directors. 

The  following  provisions  are  Jiereby  established  for  the  election 
of  directors: 

1.  At  every  election  of  directors  in  any  domestic  mutual  life 
insurance  corporation,  whether  incorporated  by  special  act  or  un- 
der general  law  and  anything  to  the  contrary  in  its  charter,  cer- 
tificate of  incorporation  or  by-laws  notwithstanding,  every  policy- 
holder whose  insurance  shall  be  in  force  and  shall  have  been  in 
force  for  at  least  one  year  prior  thereto  shall  be  entitled  to  vote 
dthout  other  qualification. 


158  The  Insurance  Law.  §  94. 

2.  Every  such  policyholder,  and  every  other  person  having  a 
right  to  vote  by  virtue  of  any  contract  made  prior  to  the  enact- 
ment of  this  section  which  shall  remain  in  force  until  the  date  of 
such  election,  shall  be  entitled  to  vote  in  person  or  by  proxy  or  by 
mail,  as  herein  provided. 

3.  Except  as  otherwise  now  provided  with  reference  to  existr 
ing  policies,  every  policyholder  shall  be  entitled  to  one  vote  only 
irrespective  of  the  number  of  policies  or  the  amount  of  insurance 
held  by  him;  and  unless  a  policy  shall  hlave  been  assigned  more 
than  six  months  prior  to  the  election  by  an  assignment  absolute 
on  its  face  to  an  assignee  other  than  the  corporation  whHch  shall 
have  issued  the  policy  the  person  upon  whose  application  the 
policy  shall  have  been  issued,  or  if  the  application  be  signed  by 
more  than  one  person,  the  person  whose  life  is  insured  shall  be 
deemed  to  be  a  policyholder  entitled  to  vote  as  aforesaid ;  in  case 
a  policy  shall  have  been  assigned  as  aforesaid,  the  assignee  shall 
be  deemed  to  be  a  policyholder  entitled  to  vote,  provided  his  sig- 
nature, either  attested  by  the  assignor  or  acknowledged  in  like 
manner  as  in  case  of  a  deed  to  be  recorded  in  this  state,  shall  have 
been  filed  at  the  home  office  of  the  corporation  which  shall  have 
issued  the  policy. 

4.  'Not  less  than  five  months  nor  more  than  eight  months  prior 
to  every  such  election,  on  request  of  not  less  than  twenty-five 
policyholders  entitled  to  vote  at  the  last  prior  election,  which  re- 
quest must  be  signed  by  each  of  said  policyholders  and  acknowl- 
edged by  each  of  them  in  the  same  manner  as  in  the  case  of  a 
deed  to  be  recorded  in  the  state  of  Xew  York,  a  duplicate  of  such 
request  to  be  filed  with  such  corporation  and  notice  of  not  less 
than  five  days  of  a  hearing  thereon  given  to  such  corporation,  the 
superintendent  of  insurance,  may  in  his  discretion  require  such 
corporation  within  forty-five  days,  and  not  less  than  thirty  days, 
to  file  in  his  office  a  full  and  correct  copy  of  its  list  or  card  cata- 
logue of  the  names  and  last  known  post-offi'ce  addresses  of  all 
policyholders  who  have  been  insured  for  at  least  one  year  under 
a  policy  for  one  thousand  dollars  or  more,  or  any  part  of  such 
list  or  card  catalogue  as  he  may  specify.  Such  list  or  any  part 
thereof  which  may  be  ordered  filed  shall  be  arranged,  classified 
and  corrected  as  may  bo  directed  by  the  superintendent  of  insur- 
ance; provided,  however,  that  if  nominations  are  made,  other 
than  those  nominalcil  dn  ilic  iKlnilTiislrnlion  licls'ct  liy  iIk*  Ixiai'd 
of  directors,  a  complete  list  or  card  catalogue  of  names  of  all  of 


§94.  LiFE^  Health^  Casualty  Corporations.  159 

such  policyholders  shall  be  so  filed  within  forty-five  days  after 
the  copy  of  said  certificate  of  such  nominations  certified  by  said 
superintendent  of  insurance,  shall  be  filed  at  the  home  office  of 
the  said  corporation,  which  list  or  card)  catalogue  shall  be  cor- 
rected from  the  records  of  the  home  office  of  such  corporation  so 
that  a  list  or  card  catalogue  as  nearly  correct  as  may  be  shall  be 
on  file  to  within  three  months  of  such  election. 

5.  iSaid  list  or  card  catalogue  or  any  part  thereof  so  filed  while 
in  the  custody  of  the  superintendent  shall  be  subject  to  inspec- 
tion under  regulations  prescribed  hy  the  superintendent  of  insur- 
ance at  any  time  during  business  hours  by  any  policyholder  in 
said  corporation  or  hy  his  authorized  representative,  and  in  case 
of  a  contested  election,  under  regulations  to  be  prescribed  by  the 
superintendent,  may  be  used  in  the  canvass  of  the  policyholders 
of  the  company;  provided,  however,  that  after  such  election,  or, 
if  no  candidate  shall  have  been  nominated  other  than  those  nomi- 
nated by  the  board  of  directors,  then  after  the  time  for  such  inde- 
pendent nominations  shall  have  expired,  such  list  or  card  cata- 
logue shall  be  returned  to  the  corporation  filing  the  same  as 
aforesaid. 

6.  Where  policyholders  of  any  domestic  stock  life  insurance 
corporation  have  become  or  shall  become  entitled  to  vote  for  di- 
rectors, they  shall  be  entitled  to  vote  in  person,  by  proxy  or  by 
mail,  as  herein  provided  and  a  similar  list  or  card  catalogue  of 
policyholders,  qualified  to  vote,  in  accordance  with  the  charter  or 
by-laws  of  such  corporation,  except  the  holders  of  industrial  poli- 
cies, shall  be  filed  and  maintained  in  the  office  of  the  superin- 
tendent of  insurance  and  at  the  home  office  respectively,  similarly 
arranged  and  similarly  subject  to  inspection  and  copy  and  with- 
drawal as  in  the  case  of  mutual  corporations  as  above  provided. 

7.  Where  policyholders  in  any  company  shall  have  made  nom- 
inations as  hereinafter  prescribed,  they,  or  a  committee  repre- 
senting them,  shall  upon  demand,  with  the  approval  of  the  super- 
intendent of  insurance  and  the  payment  to  the  company  of  the 
actual  cost  of  making  such  copies,  be  furnished  by  such  company 
with  a  copy  of  such  list  of  policyholders  or  with  a  copy  therefrom 
of  the  list  for  a  separate  jurisdiction.  A  copy  of  a  list  so  taken, 
or  of  any  part  thereof,  shall  be  held  by  persons  receiving  the  same 
inviolate  for  the  purposes  of  said  nominators  in  a  pending  election 
and  shall  not  be  transferred  to  other  persons  for  any  other  use 


160  The  Insurance  Law.  §  94. 

whatever.     At  the  close  of  the  canvass  of  the  votes  all  copies  of 
such  lists  shall  be  returned  to  the  company. 

8.  At  least  seven  months  prior  to  the  date  of  any  election  of 
directors  in  any  such  corporation,  the  board  of  directors  shall 
nominate  candidates  for  every  vacancy  to  be  filled  at  such  election 
and  shall  also  appoint  three  persons,  jointly  or  severally,  to  re- 
ceive proxies  to  be  voted  for  said  nominees,  and  shall  also  file 
with  the  superintendent  of  insurance  and  at  its  home  office  a 
certificate  of  the  names  of  the  candidates  so  nominated  and  of 
the  persons  so  designated  to  receive  said  proxies  which  shall  bo 
described  as  the  "  administration  ticket." 

9.  In  every  such  corporation  which  had  over  one  hundred 
thousand  policies  in  force  at  its  last  preceding  election,  each 
in  amount  of  one  thousand  dollars  or  more,  any  qualified 
voters  equal  in  number  to  one-tenth  of  one  per  centum  of 
such  total  policies  in  force,  and  in  every  other  such 
corporation,  any  one  hundred  or  more  qualified  voters  may 
make  other  nominations  for  one  or  more  vacancies  to  be 
filled  at  any  such  election  by  filing  with  the  superintendent 
of  insurance  at  least  five  months  before  the  election  a  certificate 
signed  and  acknowledged,  giving  the  names  and  addresses  of  the 
candidates  nominated,  the  names  and  addresses  of  three  persons, 
jointly  or  severally,  designated  to  receive  proxies  to  be  voted  for 
said  nominees,  and  an  appropriate  name  or  title  designated  by 
the  superintendent  of  insurance  to  distinguish  the  ticket  from 
the  administration  ticket  and  other  nominations.  Such  nominat- 
ors must  also  file  a  copy  of  said  certificate,  certified  by  said  super- 
intendent, at  the  home  office  of  the  company  at  least  five  months 
before  such  election. 

10.  All  certificates  of  nomination  shall  be  accompanied  by  a 
written  acceptance  of  such  nomination  by  each  nominee  thereon. 
A  court  of  record  may  for  cause  shown  direct  the  name  of  any 
candidate  to  be  stricken  from  a  ticket  on  file  and  may  authorize 
the  nominators  of  such  ticket  to  substitute  th<b  name  of  another 
person  to  fill  the  vacancy  so  made. 

11.  If  no  independent  nomination  shall  have  been  made  as 
hereinbefore  provided,  then  and  in  tihat  case  all  further  proceed- 
ings in  connection  with  such  election  as  provided  by  this  section 
may  be  omitted,  and  said  election  shall  then  be  conducted  and 
held  under  such  rules  and  regulations  as  the  superintetident  of 


§94.  LiFE^  Health^  Casualty  Coeporations.  161 

insurance  may  prescribe;  but  no  votes  shall  be  cast  or  counted 
except  for  said  candidates  nominated  by  the  board  of  directors, 
or  for  such  candidates  as  the  board  of  directors  may  have  nom- 
inated to  fill  vacancies  among  said  candidates  caused  by  the  death, 
disability  or  refusal  to  stand  as  candidates  of  any  one  or  more  of 
those  so  nominated. 

12.  At  least  three  months  prior  to  any  such  election  the  cor- 
poration shall  cause  to  be  mailed,  in  a  serially  numbered  sealed 
envelope  with  postage  prepaid,  to  each  policyholder  whose  name 
shall  be  upon  said  list  and  whose  policy  shall  still  be  in  force, 
at  his  last  known  post-office  address,  a  corresponding  serially 
numbered  official  ballot  in  a  form  approved  by  the  superintendent 
of  insurance  and  containing  the  respective  tickets  nominated  as 
hereinbefore  provided  and  the  names  and  addresses  of  the  persons 
so  appointed  to  receive  proxies.  A  corresponding  serially  num- 
bered stub  or  card  containing  the  name  and  address  of  the  policy- 
holder to  whom  each  ballot  is  sent  shall  be  retained  at  the  home 
office  of  the  company  for  the  purpose  of  identifying  said  ballot 
when  returned.  Such  official  ballot  shall  be  conveniently  ar- 
ranged under  the  names  or  titles  by  whiich  the  nominations  have 
been  designated  and  shall  have  printed  upon  it  the  name  of  the 
company,  the  post-office  address  of  its  home  office,  the  number 
of  directors  to  be  elected  and  the  names  of  those  whose  terms 
expire,  the  date  of  the  election  and  instructions  as  herein  pro- 
vided for  executing  such  official  ballot  or  for  the  use  of  a  proxy 
as  herein  provided  and  a  designated  space  for  the  signature  of 
the  policyholder,  the  number  of  one  of  his  policies  and  the  signa- 
ture of  a  subscribing  witness. 

13.  'No  other  or  different  ballot  shall  be  used,  except  that  a 
duplicate  ballot  or  ballots  may  be  supplied  to  any  policyholder 
and  voter  or  to  the  holder  of  his  proxy,  for  his  own  use,  pursuant 
to  rules  and  regulations  prescribed  by  the  superintendent  of 
insurance. 

14.  There  shall  be  enclosed  in  such  sealed  envelope  with  such 
official  ballot  a  suitable  returned  gummed  envelope  having 
thereon  the  name  and  post-office  address  of  the  home  office  of  the 
corporation  and  the  words  "  ballot  for  directors."  There  shall 
also  be  enclosed  in  such  sealed  envelope  a  suitable  blank  proxy 


162  The  Insurance  Law.  §  94. 

upon  which  shall  be  printed  a  statement  of  the  right  of  the  policy- 
holder to  vote  either  by  mail  or  by  proxy  as  herein  provided  or 
in  person. 

15.  '^o  other  papers  or  written  or  printed  matter  shall  be 
enclosed  in  sucli  sealed  envelope.  Specimen  copies  of  snch  sealed 
envelope  and  enclosures  shall  be  approved  by  the  superintendent 
of  insurance  before  being  so  mailed. 

16.  A  policyholder  desiring  to  vote  by  mail  must  indicate  the 
name  of  thie  nominee  or  nominees  for  whom  he  desires  to  vote  or 
strike  out  the  name  or  names  of  those  for  whom  he  does  not 
desire  to  vote  upon  the  official  ballot  so  provided  or  must  other- 
wise suitably  indicate  in  the  blank  space  thereon  the  nominee  or 
nominees  for  whom  he  desires  to  vote,  and  must  sign  the  said 
official  ballot  in  his  own  handwriting  in  the  presence  of  a  sub- 
scribing witness,  and  place  or  cause  to  be  placed  thereon  the  num- 
ber of  at  least  one  policy  held  by  him.  Failure  to  state  or  to 
correctly  state  such  policy  number  shiall  not  render  a  ballot  void 
or  subject  the  policyholder  to  any  penalty. 

17.  Such  policyholder  must  enclose  the  official  ballot  so 
marked  in  such  return  envelope  or  in  a  similarly  inscribed  en- 
velope. Such  envelope  containii^g  the  ballot  sealed  and  postpaid 
shall  be  mailed  by  the  policyholder  to  the  hoone  office  of  the  com- 
pany. 'No  policyholder  may  vote  for  more  than  the  number  of 
directors  so  to  be  elected  and  all  ballots  upon  which  the  intent  of 
the  policyholder  does  not  fairly  appear  shall  be  void. 

18.  Any  policyholder  may  vote  by  proxy  executed  to  any  per- 
son, whether  designated  in  the  certificates  filed  as  aforesaid  or 
otherwise.  The  execution  of  a  proxy  shall  be  attested  by  a  sub- 
scribing witness  and  the  proxy  shall  set  forth  the  number  of 
at  least  one  policy  held  by  the  person  giving  it.  A  proxy  shall 
not  be  valid  unless  executed  within  three  months  prior  to  the 
election  and  shall  be  used  only  at  such  election  or  any  adjourn- 
ment thereof  and  may  be  revoked  by  the  policyholder  giving  the 
same  at  any  time  prior  to  the  opening  of  the  polls  upon  the  day 
of  such  election.  In  exercising  such  proxy  thle  holder  or  holders 
thereof  shall  vote  only  upon  the  official  ballot,  or  the  duplicate 
thereof,  furnished  to  such  policyholder  as  hereinbefore  provided, 
to  which  such  party  shall  be  attached.     In  so  voting  the  proxy 


§  94.  LiFE^  Health^  Casualty  Coeporations.  163 

holder  shall  sign  said  ballot  in  the  name  of  the  policyholder,  and 
shall  also  sign  his  own  name  as  proxy.  Ballots  voted  by  proxy 
holders  shall  be  mailed  to  the  home  office,  or  voted  in  person  by 
said  proxy  holder,  in  the  same  manner  as  herein  provided  for 
ballots  voted  directly  by  policyholders. 

19.  The  votes  cast  at  such  election  shall  be  limited  to  the  candi- 
dates nominated  as  aforesaid  except  that  in  case  of  a  vacancy 
occurring  upon  any  ticket  so  nominated  the  board  of  directors  of 
such  corporation,  if  the  candidate  was  upon  the  administration 
ticket,  and  a  majority  of  the  nominators  if  the  candidate  was 
upon  an  independent  ticket,  shall  nominate  another  candidate  in 
his  place  by  filing  a  certificate  of  said  nomination,  with  the  super- 
intendent of  insurance  and  a  certified  copy  thereof  at  the  home 
office  of  the  company  if  such;  vacancy  occurs  more  than  five 
months  prior  to  the  day  set  for  the  election,  and  the  name  of  the 
candidate  so  selected  shiall  be  set  forth  in  the  official  ballots  sent 
out  by  the  company.  If  such  vacancy  occurs  within  five  months 
prior  to  such  election  then  the  directors  elected  at  such  election 
shall  have  power  to  fill  such  vacancy. 

20.  All  ballots  by  mail  shall  be  received  at  the  home  office  of 
a  company  holding  an  election  by  two  or  mO'*e  persons,  one-half 
of  whom  shall  be  appointed  for  that  purpose  by  the  superintend- 
ent of  insurance  and  one-half  by  the  directors  of  the  company. 
The  compensation  of  the  custodians  so  appointed  shall  be  paid  by 
the  company.  Such  custodians  shall  keep  a  daily  record  of  the 
envelopes  marked  as  containing  ballots  for  directors  which  are 
received  at  the  home  office,  and  shall  securely  retain  them  in  thieir 
joint  custody  in  safety  vaults  or  compartments  accessible  only  to 
such  custodians  and  not  to  either  of  them  separately,  under  regu- 
lations prescribed  by  the  superintendent  of  insurance.'  Prior  to 
the  closing  of  the  polls  election  day  said  custodians  shall  deliver 
all  ballots  so  received  by  them  to  the  inspectors  of  election. 

21.  The  election  shall  be  held  at  the  home  office  of  the  com- 
pany. The  polls  shall  be  opened  at  ten  o'clock  in  the  forenoon 
and  remain  open  until  four  o'clock  in  the  afternoon  of  the  day 
of  election,  at  which  time  they  shall  be  closed.  All  votes  cast  at 
such  election  shall  be  by  ballot  as  hereinbefore  pro^dded. 


164  The  Insurance  Law.  §  94. 

22.  The  superintendent  of  insurance  shall  appoint  an  ade- 
quate number  of  inspectors  of  election  who  may  employ  expert 
accountants  and  assistants  and  may  procure  stationery  and  sup- 
plies for  conducting  the  election  and  canvassing  the  votes.  Their 
compensation  and  necessary  disbursements  shall  be  paid  by  the 
company.  Such  inspectors  shall  have  power  to  determine  all 
questions  concerning  the  verification  of  the  ballots,  the  ascertain- 
ment of  the  validity  thereof,  the  qualifications  of  the  voters  and 
the  canvass  of  the  vote;  and  with  respect  thereto  shall  act  under 
8uch  rules  and  regulations  as  shall  be  prescribed  by  the  superin- 
tendent of  insurance. 

23.  All  envelopes  marked  substantially  as  hereinbefore  pre- 
scribed received  by  mail  at  the  home  office  of  the  company  at  any 
time  prior  to  the  day  of  election  or  on  that  day  before  the  polls 
are  closed  shall  be  forthwith  delivered  intact  without  opening  to 
the  custodians  appointed  as  hereinbefore  provided  and  before  the 
polls  are  closed  shall  be  delivered  to  the  inspectors  of  election. 

24.  'No  person  shall  conceal  or  withhold  or  aid  or  abet  any 
other  person  in  concealing  or  withholding  from  the  custodians 
or  inspectors  any  such  envelope;  nor  shall  any  person,  other  than 
an  inspector,  open  or  aid  or  abet  any  person  to  open  any  such 
envelopes. 

26.  No  ballots  received  by  mail  at  the  office  of  the  company 
or  offered  personally  or  by  proxy  after  the  polls  are  closed  shall 
be  counted.  All  ballots  offered  personally  or  under  proxies  and 
all  ballots  received  by  mail  at  the  office  of  the  company  as  afore- 
said before  the  polls  are  closed  shall  be  received  by  the  inspectora 
subject  to  verification  and  ascertainment  of  the  validity  thereof 
and  of  the  qualifications  of  the  voter. 

26.  Immediately  upon  the  closing  of  the  polls  the  inspectors 
shall  proceed  to  the  examination  of  the  ballots  and  shall  canvasf 
the  votes  lawfully  cast.  The  canvass  shall  proceed  from  day  to 
day  and  the  inspectors  shall  certify  the  result  to  the  company 
and  to  the  superintendent  of  insurance  as  soon  as  it  is  completed. 

27.  Representatives  designated  by  a  majority  of  each  three 
persons  who  shall  have  been  appointed  to  receive  proxies  to  be 
voted  for  tickets  nominated  as  aforesaid  may,  in  such  number  as 


§94.  LiFE^  Health^  Casualty  Cojipoeations.  165 

shall  be  approved  by  the  superintendent  of  insurance,  be  present 
during  the  casting,  verification  and  canvass  of  the  votes.  The 
compensation  of  such)  representatives  shall  not  be  a  charge  upon 
or  paid  from  the  funds  of  the  company. 

28.  All  ballots  and  proxies  received  by  the  inspectors  of  elec- 
tion shall  immediately  upon  the  completion  of  the  canvass  be 
placed  in  sealed  packages  and  shall  be  preserved  by  the  said 
inspectors  for  a  period  of  four  months  subject  to  the  order  of  any 
court  having  jurisdiction  of  any  proceedings  relating  thereto. 

29.  The  superintendent  of  insurance  shall  have  power  to 
supervise  and  direct  th)e  methods  and  procedure  of  all  elections 
herein  provided  for  and  to  make  all  further  needful  rules  and 
regulations  concerning  the  same.  All  bills  for  or  on  account  of 
the  custodians  of  ballots  and  inspectors  of  election,  their 
employees,  assistants,  necessary  expenses  or  disbursements,  dur- 
ing the  conduct  of  such  election,  and  the  canvass  of  the  votes, 
shall  be  approved  by  the  superintendent  of  insurance  before 
payment  by  the  company. 

30.  The  said  elections  and  the  conduct  thereof  shall  at  all 
times  be  subject  to  the  supervision  and  control  of  the  courts  in 
like  manner  as  elections  for  state,  county  and  municipal  officers 
so  far  as  applicable. 

31.  The  including  by  any  corporation  of  the  name  of  any  per- 
son in  any  list  of  policyholders  required  by  this  section  shall  not 
be  construed  as  an  admission  by  the  corporation  of  the  validity 
of  any  policy,  and  no  such  list  shall  be  competent  evidence  against 
the  corporation  in  any  action  or  proceeding  in  which  the  question 
of  the  validity  of  any  policy  or  of  any  claim  under  it  is  involved. 

32.  'No  insurance  company,  and  no  officer,  agent  or  employee 
thereof  shall  knowingly  omit  the  name  of  a  policyholder  and 
voter  from  the  lists  herein  required  to  be  filed,  or  shall  knowingly 
omit  to  give  the  correct  name  and  address  of  such  policyholder 
and  voter,  or  knowingly  give  a  wrong  address,  or  shall  expend, 
advance  or  loan  any  money  of  th'e  company  contrary  to  the 
provisions  of  this  section. 

33.  Except  where  such  expenditure  is  authorized  or  required 
by  this  section,  no  money  of  th'e  company  shall  be  expended  in 
connection  with  such  election  or  in  canvassing  therefor,  and  no 
officer  or  agent  of  the  company  shall  directly  or  indirectly  make 


166  Tpie  Insurance  Law.  §  94. 

any  advance  or  loan  of  such  moneys  to  any  person  in  connection 
with  or  for  the  purpose  of  such  election  or  canvass. 

34.  'No  officer,  salaried  agent  of  employee  shall,  within  the 
period  between  the  filing  of  the  nominations  and  the  election, 
during  business  hours,  devote  any  of  his  time  in  soliciting  votes 
in  support  of  or  in  opposition  to  any  candidate  or  list  of  candi- 
dates in  connection  with  any  such  election.  No  officer,  agent  or 
employee  shall  compel  or  coerce  any  other  officer,  agent  or  em- 
ployee to  support,  work  for,  or  oppose  any  candidate  or  any  list 
of  candidates.  The  stationery  or  supplies  of  the  company  or 
office  space  devoted  to  the  conduct  of  its  business  shall  not  be  used 
for  furthering  the  interest  of  any  ticket  or  candidate  thereon. 

35.  No  person,  whetlier  connected  with  the  company  or  other- 
wise, shall  issue  or  cause  to  be  issued  any  circular  or  other  written 
or  printed  communication  either  in  behalf  of  or  in  opposition  to 
any  ticket  or  any  candidate  thereon  containing  any  false 
statement. 

Source.— Former  §  94,  as  added  by  L.  1906,  chap.  326,  and  amended  by  L. 
1907,  chap.  623. 

Amended  by  L.  1915,  chap.  617.    In  effect  May  12,  1915. 

Xote. —  By  the  amendment  of  1915,  the  filing  of  two  copies  of  the  complete 
list  of  policyholders  in  the  office  of  the  Siiperintendent  of  Insurance  .prior  to 
election,  no  longer  is  required,  and  in  place  of  such  requirement,  the  com- 
panies in  the  discretion  of  the  Superintendent  are  obliged  to  file  either  com- 
plete or  partial  list  of  .policyholders,  holding  policies  in  an  amount  of  $1,000 
or  more  in  event  of  formal  request  therefor  by  25  policjiholders.  The  policy- 
iholders'  lists  so  filed  are  subject  to  inspection  and  in  a  contested  election 
may  be  used  in  the  canvass  under  regulations  prescribed  by  the  Superintendent. 
In  addition  such  lists  filed  by  stock  corporations  whose  policyholders  are  en- 
titled to  vote  for  directors  are  subject  to  copy.  Qualified  voters  equal  in  number 
to  one-tenth  of  one  per  cent  of  the  total  policies  in  force  may  make  inde- 
pendent nominations  except  in  case  of  corporations  having  less  than  one  hun- 
dred thousand  policyholders,  each  in  amount  of  one  thousand  or  more,  one 
hundred  qualified  as  voters  is  sufficient.  No  change  is  made  in  the  qualifica- 
tions of  voters. —  Ed. 

A  proxy  must  be  executed  within  the  three  months  prior  to  the  election. 
Ruling  Ins.  Bept.,  Oct.  29,  1912. 

Vacancies  caused  by  declination  of  nominees  to  act  as  directors  within  five 
months  prior  to  the  approaching  election  may  be  filled  by  action  of  directors 
elected  at  such  election.     Ruling  Ins.  Dept.,  April  15,  1913. 

A  proxy  only  covers  directors  named  in  the  nomination  certificate.  Ruling 
Ins.  Dept.,  September  27,  1012. 

Policyholders  of  a  domestic  life  insurance  company  may  vote  for  directors 
nominated  by  such  policyholders;  a  stockholder  may  vote  as  such  or  as  a 
policyholder,  but  not  as  both.    Attorney-General  Rep.,  1906,  page  563. 


.§§  95,  96.        LiFE^  Heaxtii^  Casualty  Corporations.        167 

The  provision  requiring  a  certificate  of  nomination  to  be  filed,  etc.,  does 
not  authorize  the  superintendent  of  insurance  to  change  the  nominations  or 
make  any  different  certificate  of  the  nominees  from  that  filed;  after  the  filing 
of  such  record  the  court  will  not  compel  the  superintendent  of  insurance  to 
change  the  record  or  compel  the  insurance  company  to  send  a  different  state- 
ment of  nominations.    People  ex  rel.  Shook  v.  Kelsey,  114  App.  Div.,  888. 

§  95.  Conversion  of  a  stock  life  insurance  corporation  into 
a  mutual  life  Insurance  corporation. 

Any  domestic  stock  life  insurance  corporation,  whether  incor- 
porated under  a  general  law  or  by  special  act,  may  become 
a  mutual  life  insurance  corporation,  and  to  that  end  may 
carry  out  a  plan  for  the  acquisition  of  shares  of  its  capital 
stock,  provided,  however,  that  such  plan:  (1)  Shall  have  been 
adopted  by  a  vote  of  a  majority  of  the  directors  of  such  cor- 
poration; (2)  shall  have  been  approved  by  a  vote  of  stockholder^? 
representing  a  majority  of  the  capital  stock  at  a  meeting  of  stock- 
holders called  for  the  purpose;  (3)  shall  have  been  approved  l}^  a 
majority  vote  at  a  meeting  called  for  the  purpose,  in  such  manner 
as  shall  be  provided  for  in  such  plan,  of  policyholders  each  insured 
in  at  least  one  thousand  dollars  and  whose  insurance  shall  then 
be  in  force  and  shall  have  been  in  force  for  at  least  one  year  prior 
to  such  meeting;  and  (4)  shall  r^ave  been  submitted  to  the  super- 
intendent of  insurance  and  shall  have  been  approved  by  him  in 
writing,  provided  that  such  plan  shall  not  be  approved  by  the 
superintendent  unless  at  the  time  of  such  approval  the  corpora- 
tion, after  deducting  the  aggregate  sum  appropriated  by  such  plan 
for  the  acquisition  of  all  of  its  capital  stock,  shall  be  possessed 
of  assets  sufficient  to  maintain  its  deposit  theretofore  made  with 
the  superintendent  and  not  less  than  the  entire  liabilities  of  the 
corporation,  including  the  net  values  of  its  outstanding  contracts 
computed  according  to  the  standard  adopted  by  the  corporation 
under  section  eighty-four  of  this  chapter,  and  also  all  funds,  con- 
tingent reserves  and  surplus  save  so  much  of  the  latter  as  shall 
have  been  appropriated  under  such  plan. 

Source. — Former  §  95,  as  added  by  L.  190C,  chap.  326. 
Amended  by  L.  1911,  chap.  150. 

§  96.    Limitation  of  new  business. 

'No  domestic  life  insurance  corporation  shall  issue  in  any  year 
new  policies  for  a  larger  amount  in  the  aggregate  than  as  follows, 


168  The  Insurance  Law.  §  96. 

to  wit:  If  the  total  amount  of  insurance  by  said  corporation 
in  force  on  the  thirty-first  day  of  December  of  the  preceding 
year  is  more  than  fifty  million  dollars,  and  not  in  excess  of  one 
hundred  million  dollars,  not  more  than  thirty-five  per  centum 
thereof ;  if  more  than  one  hundred  million  dollars,  and  not  in  ex- 
cess of  tliree  hundred  million  dollars,  not  more  than  thirty  per  cen- 
tum thereof,  or  thirty-five  million  dollars,  whichever  is  the  larger; 
if  more  than  three  hundred  million  dollars,  and  not  in  excess  of 
six  hundred  million  dollars,  not  more  than  twenty-five  per  cen- 
tum thereof,  or  ninety  million  dollars,  whichever  is  the  larger ; 
if  more  than  six  hundred  million  dollars,  not  more  than  one  hun- 
dred and  fifty  million  dollars,  or  it  may  increase  its  new  business 
over  the  largest  amount  issued  in  any  one  of  the  three  years 
immediately  preceding  in  the  proportion  in  respect  to  said  amount 
which  the  difference  between  twenty-five  per  centum  of  its  net 
renewal  premiums  computed  according  to  the  bases  of  mortality 
and  interest  assumed  in  calculating  its  liabilities,  and  its  total 
expenses  for  such  preceding  year,  after  deducting  from  said  total 
expenses  (1),  the  items  of  first  year  expenditure  specified  in  the 
first  sentence  of  section  ninety-seven  of  this  chapter,  (2)  its  actual 
investment  expenses  (not  exceeding  one-fourth  of  one  per  centum 
of  the  mean  invested  assets)  and  (3)  taxes  on  real  estate  and  other 
outlays  exclusively  in  connection  with  real  estate,  bears  to  said 
net  renew^al  premiums ;  provided,  that  in  determining  the  amount 
of  insurance  in  force  and  the  amount  of  new  insurance  issued, 
policies  of  reinsurance,  group  insurance  i> ranted  on  the  same  plan 
within  each  group,  under  a  contract  with  a  given  person,  finn  or 
corporation,  covering  groups  of  not  less  than  one  hundred  live^ 
all  in  the  employ  of  such  person,  firm  or  corporation,  and  indus- 
trial policies  issued  ujx)n  the  weekly  premium  plan  and  all  pre- 
rniuans  on  such  policies  and  the  expenses  in  connection  with  such 
policies,  shall  be  excluded  and  there  shall  be  included  only  that 
insurance  upon  '\Ahich  the  first  premium  or  instalment  thereof  has 
actually  ibeen  received.  If  it  appear  that  in  the  ordinary  course 
of  its  business  for  any  calendar  year  the  amount  of  insurance 
issued  by  any  corporation  will  probably  exceed  the  limitation 
imposed  by  this  section,  tlie  superintendent  of  insurance  may 
before  tlie  expiration  of  such  year  authorize  such  corporation  in 
writing  to  issue  additional  insurance  not  to  exceed  ten  per  centum 
of  the  limitation  for  such  year;  bnt  snch  additional  insurance  shall 
be  charged  as  a  part  of  the  new  ]x>licies  for  llic  next  succeeding 
year,  in  accordance  witli  i1h>  li  mi  In  I  inns  of  this  section.     A  foreign 


§97.  LiFE^  Health^  Casualty  Corpoeations.  169 

life  insurance  corporation,  which  shall  not  conduct  its  business 
within  the  limitation  and  in  accordance  with  the  requirements 
im'posed  by  this  section  upon  domestic  corporations,  shall  not  be 
permitted  to  do  business  within  this  state. 

Source.— Former  §  96,  as  added  by  L.  1906,  chap.  326. 

Amended  bj  L.  1010,  chap.  697;  L.  1911,  chap.  369;  L.  1913,  chap.  304,  and 
L.  1916,  chap.  360.     In  effect  May  1,  1916. 

Note. —  The  amendment  of  1916  eliminated  group  insurance,  as  defined, 
from  the  limits  prescribed  by  the  section  and  modified  .percentages  and 
amounts  of  insurance,  whidi  may  be  written. —  Ed. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  was  to  allow  the  superintendent  to  authorize  the  issuing  ol  additional 
insurance  in  excess  of  limitation  to  amount  of  ten  per  centum  of  limitation; 
but  such  additional  insurance  is  charged  as  a  part  of  the  new  policies  for  the 
next  succeeding  year. — Ed. 

Section  96  is  not  a  local  or  private  bill  and  does  not  violate  §  16  of  article  3 
of  the  State  Constitution  providing  that  no  such  bill  shall  be  expressed  in 
the  title;  nor  is  it  unconstitutional  under  §  18  of  article  3,  because  corpora- 
tions with  a  certain  kind  of  insurance  are  excepted.  Bush  v.  New  York  Life 
Ins.  Co.,  135  App.  Div.,  447. 

Annuity  contracts,  whether  survivorship  annuities  or  not,  do  not  come 
within  the  provisions  of  §§  96,  97,  except  as  to  the  provisions  of  the  latter 
relating  to  expenses  other  than  investments.    Ruling  Ins.  Dept.,  Aug.  2,  1909. 

Only  policies  actually  paid  for  and  of  which  the  company  has  received  proper 
advice  so  as  to  make  the  proper  entries  on  its  books  prior  to  December  first 
in  any  given  year  are  contemplated  by  the  word  "  issue  "  in  §  97.  Ruling 
Ins.  Dept.,  July  23,  1909. 

The  words  "  policies  of  re-insurance  "  as  used  in  section  96  cover  the  case 
of  the  assumption  by  one  company  of  the  policies  of  another.  Ruling  Ins. 
Dept.,  Nov.  9,  1911. 

Policies  issued  under  a  reinsurance  contract  between  Postal  and  Mutual 
Reserve  companies  not  regarded  as  new  business.  Attorney-General  Rep.,  Sep- 
tember 13  and  July  22,    1909. 

Limitations  of  section  96  apply  to  foreign  life  insurance  corporations  doing 
business  in  this  State.     Ruling  Ins.  Dopt.,  October  3,  1912. 

Where  a  company  has  written  an  excess  under  permission  of  the  Super- 
intendent, in  arriving  at  the  limit  for  the  succeeding  year,  it  should  start 
with  the  total  amount  paid  for  and  apply  the  fraction  of  increase  to  that 
amount  without  deducting  the  excess  issued,  and  after  getting  the  increase 
add  it  to  the  original  amount  written  and  then  deduct  the  excess  as  a  final 
part  of  the  computation.    Ruling  Ins.  Dept.,  June  30,  1915. 

Excess  of  preceding  year  does  not  enter  into  computation.  Ruling  Ins. 
Dept.,  June  30,  1915. 

§  97.    Limitation  of  expenses. 

[N'o  domestic  life  insurance  corporation  shall  in  any  calendar 
year,  after  the  year  nineteen  hundred  and  six,  expend  or  become 


170  The  Insurance  Law.  §  97. 

liable  for,  including  any  and  all  amounts  whioh  any  person,  firm  or 
corporation  is  permitted  to  expend  on  its  behalf  or  under  any  agree- 
ment with  it  (1)  for  commissions  on  first  year's  premiums,  (2)  for 
compensation,  not  paid  by  commission,  for  services  in  obtain- 
ing new  insurance  exclusive  of  salaries  paid  in  good  faith 
for  agency  supervision  either  at  the  home  office  or  at  branch 
offices,  (3)  for  medical  examinations  and  inspections  of  pro- 
posed risks,  and  (4)  for  advances  to  agents,  a  total  amount  exceed- 
ing in  the  aggregate  (a)  the  loadings  upon  the  premiums  for 
the  first  year  of  insurance  received  in  said  calendar  year  (calcu- 
lated on  the  basis  of  the  American  experience  table  of  mortality 
with  interest  at  the  rate  of  three  and  one-half  per  centum  per 
annum)  and  (b)  the  present  values  of  the  assumed  mortality  gains 
for  the  first  five  years  of  insurance  on  policies  in  force  at  the  end 
of  said  calendar  year  on  which  the  first  premium,  or  instalment 
thereof,  has  been  received  during  said  calendar  year,  as  ascertained 
by  the  select  and  ultimate  method  of  valuation  as  provided  in  sec- 
tion eighty-four  of  this  chapter;  and  (c)  on  policies  issued  and 
terminated  in  said  calendar  year  the  full  gross  premiums  received, 
less  the  net  cost  of  insurance  for  the  time  the  insurance  was  in 
force,  computed  by  the  American  experience  select  and  ultimate 
table,  three  and  one-half  per  centum.  'No  such  corporation 
shall  make  or  incur  any  expense  or  permit  any  expense 
to  be  made  or  incurred  upon  its  behalf  or  under  any  agree- 
ment with  it,  except  actual  investment  expenses  (not  exceeding 
one-fourth  of  one  per  centum  of  the  mean  invested  assets)  and 
except  taxes  and  also  except  outlays-  exclusively  in  connection 
with  real  estate,  in  excess  of  the  aggregate  amount  of  the 
actual  loadings  upon  premiums  received  in  said  year  calculated 
according  to  the  standards  adopted  by  the  company  under  section 
eighty-four  of  this  chapter,  and  the  present  values  of  the  ^assumed 
mortality  gains  hereinbefore  mentioned.  Provided,  however,  that 
any  such  corporation  having  less  than  eighty  millions  of  insurance 
in  force,  may  incur  a  total  expenditure  exceeding  the  limits  of 
expenditure  as  herein  defined  by  an  amount  not  greater  than  the 
following  percentages . of  its  loadings  for  the  preceding  calendar 
year,  to  wit:  having  at  the  end  of  such  year  less  than  ten  millions, 
forty  per  centum ;  having  twenty  but  loss  than  thirty  millions, 
thirty-five  per  centum ;  having  thirty  but  less  than  forty  millions, 


§  97.  LiFE^  Health^  Casualty  Coepobations.  171 

thirty  per  centum;  having  forty  but  less  than  fifty  millions, 
twenty-five  per  centum ;  having  fifty  but  less  than  sixty  millions, 
twenty  per  centum;  having  sixty  but  less  than  seventy  millions, 
fifteen  per  centum ;  having  seventy  but  less  than  seventy-five  mil- 
lions, ten  per  centum ;  having  seventy-five  but  less  than  eighty  mil- 
lions, five  per  centum.  'No  such  corporation,  nor  any  person, 
firm  or  corporation  on  its  behalf  or  under  any  agreement 
with  it  shall  pay  or  allow  to  any  agent,  broker  or  other 
person,  firm  or  corporation  for  procuring  an  application  for  life 
insurance,  for  colk?cting  any  premium  thereon  or  for  any  other 
service  performed  in  connection  therewith  any  compensation  other 
than  that  which  has  been  determined  in  advance.  Except  as 
hereinafter  provided  all  bonuses,  prizes  and  rewards,  and  all 
increased  or  additional  commissions  or  compensation  of  any  sort 
based  upon  the  volume  of  any  new  or  renewed  business  or  the 
aggregate  of  policies  written  or  paid  for,  are  prohibited.  Noth- 
ing herein  contained  is  to  be  construed  as  prohibiting  the  institu- 
tion of  contests  or  competitions  among  agents,  and  the  recognition 
of  success  in  such  competitions  by  the  awarding  of  ribbon  deco- 
rations, medals,  pins,  buttons  or  other  tokens  of  small  intrinsic 
value,  given  not  as  compensation  but  as  a  bona  fide  recognition  of 
merit.  No  such  corporation  shall  pay  commissions  upon 
renewal  premiums  received  upon  policies  issued  after  the  year 
nineteen  hundred  and  six,  in  excess  of  five  per  centum  of  the  pre- 
mium annually  for  fourteen  years  after  the  first  year  of  insurance 
in  the  case  of  endowment  policies  providing  for  less  than  twenty 
annual  premiums,  nor  in  excess  of  seven  and  one-half  per  centum 
of  the  premium  annually  for  the  first  nine  years  after  the  first 
year  of  insurance  and  five  per  centum  of  the  premium  annually 
for  the  next  ensuing  five  years  in  the  case  of  other  forms  of  poli- 
cies ;  provided  that  an  amount  found  to  be  equivalent  to  the  aggre- 
gate amount  so  payable  by  a  calculation  approved  by  the  super- 
intendent of  insurance  and  based  upon  mortality,  interest  and  lapse 
rates,  may  be  distributed  through  three  or  more  years,  or  through 
a  period  exceeding  fourteen  years,  but  not  more  than  two-fifths  of 
such  amount  shall  be  payable  for  any  one  year;  provided  further 
that  in  any  agency  district  subject  to  the  supervision  of  a  local  sala- 
ried representative  the  renewal  commission  payable  to  agents  of 
such  district  shall  not  exceed  two-thirds  of  the  foregoing  rates  annu- 


172  The  Insurance  Law.  §  97. 

ally  for  fourteen  years,  subject  to  the  calculation  as  aforesaid;  pro- 
vided further  that  any  such  corporation  may  condition  the  allow- 
ance or  payment  in  whole  or  in  part  of  any  of  the  renewal 
commissions  allowed  to  be  paid  as  aforesaid  upon  the  efficiency  of 
service  of  the  agent  receiving  the  same  or  upon  the  amount  and 
quality  of  the  business  renewed  under  his  supervision;  and  also 
provided  that  a  fee  not  exceeding  three  per  centum  may  be  paid 
for  the  collection  of  premiums  which  shall  be  received  for  any 
year  after  the  fifteenth  year  of  insurance.  If  any  such  corporation 
shall  compensate  its  agents,  or  any  of  them,  after  the  first  insur- 
ance year,  in  whole  or  in  part,  upon  any  other  plan  than  commis- 
sions and  collection  fees,  the  aggregate  sum  so  paid  shall  in  no  year 
exceed  the  limitations  herein  imposed  and  the  schedule  and  plan  of 
such  compensation  shall  be  submitted  to  and  approved  by  the  super- 
intendent of  insurance.  No  such  corporation,  nor  auy  person,  firm 
or  corporation  on  its  behalf  or  under  any  agreement  with  it,  shall 
miilve  any  loan  or  advance  to  any  person,  firm  or  corporation  solicit- 
ing or  undertaking  to  solicit  applications  for  insurance  without  ad- 
equate collateral  security,  nor  shall  any  such  loan  or  advauce  be 
made  upon  the  security  of  renewal  commissions,  or  of  other  compen- 
sation earned  or  to  be  earned  by  the  borrower  except  advances 
against  compensation  for  the  first  year  of  insurance.  A  foreign  life 
insurance  corporation  which  shall  not  conduct  its  business  within 
the  limitations  and  in  accordance  with  the  requirements  imposed 
by  this  section  upon  domestic  corporations  shall  not  be  permitted  to 
do  business  within  the  state.  Any  stock  corporation  which 
has  heretofore  issued  and  represented  itself  as  issuing  non- 
participating  policies  exclusively,  and  which  has  changed  and 
become  a  mutual  company,  or  become  a  company  issuing  and 
representing  itself  as  issuing  participating  policies  exclusively, 
or  any  such  stock  corporation  which  may  hereafter  change  and 
become  a  mutual  company,  or  become  a  company  issuing  and 
representing  itself  as  issuing  participating  policies  exclusively, 
may  incur  a  total  expenditure  exceeding  the  limits  of  expendi- 
ture herein  defined  by  an  amonnt  not  greater  than  six  per  centum 
of  the  aggregate  net  premiums  according  to  the  standards  adopted 
by  the  company  as  aforesaid.  No  cmnpany  transacting  business 
exclusively  on  the  mutual  plan  shall  issue  after  June  tliirtieth, 
nineteen  hundred  and  sixteen,  any  policy  of  life  or  endowment 
ninsuranoe  (other  tlian  group  insurance  and  reinsurance)  upon 
which  the  premium  loading  is  less  than  would  enable  the  company 
to  comply  with  the  provisions  of  this  section  limiting  total  ex])enses 


§  97.  LiFE^  Health^  Casualty  Corporations.  173 

if  the  premium  loading;  for  all  its  policies  were  calculated  accord- 
ing to  tlie  rule  employed  by  the  company  for  the  calculation  of  the 
premium  loading  on  such  policy.  This  section  shall  not  apply  to 
expenses  made  or  incurred  in  the  business  of  industrial  insurance 
nor,  except  as  to  the  limitation  of  expenses  for  the  first  year  of 
insurance  and  as  to  compensation  of  and  loans  and  advances  to 
agents  or  solicitors,  to  stock  corporations  issuing  and  representing 
themselves  as  issuing  nonparticipating  policies  exclusively. 

Source.— Former  §  97,  as  added  by  L.  1906,  chap.  326. 

Amended  by  L.  1909,  chap.  301;  L.  1910,  chap.  697;  L.  1913,  chap.  304; 
L.  1914,  chap.  103;  L.  1915,  chap.  617,  and  L.  1916,  chap.  120.  In  effect  April 
3,  1916. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  304  of 
1913  was  to  clarify  it  as  to  giving  of  prizes  and  tokens  of  merit. — Ed. 

The  amendment  of  this  section  by  chapter  103  of  1914  added  the  third 
sentence,  "  Provided,  however,  that  any  such  corporation  *  *  *  but  less 
than  oigiity  millions,  five  per  centum." — Ed. 

Salaries  based  on  the  premiums  or  on  account  of  new  business  issued  are 
commissions  and  must  be  enlarged  to  the  cost  of  new  business.  Ruling  Ins. 
Dept.,  Nov.  9,   1911. 

The  whole  of  the  first  year's  premium  may  not  be  used  for  expenses, 
leaving  nothing  for  the  required  reserve.  There  must  be  first  set  aside  from 
the  premiums  received  an  amount  sufficient  to  pay  the  cost  of  carrying  the 
policy  at  select  rates  to  the  date  when  the  next  premium  is  due,  and  the 
whole  balance  of  the  premium  actually  received  by  the  company  is  available 
to  the  company  as  a  margin  provided  that  said  balance  docs  not  exceed  the 
margin  permitted,  that  is  the  aggregate  of  the  loading  and  the  ass<umed 
gains.     Attorney-General  Eep.,  Nov.  21,  1907. 

WTiere  a  five-year  non-renewable  term  policy  under  the  standard  policy  form 
of  the  State  of  New  York  is  exchanged  for  an  ordinary  life,  limited  payment 
life  or  endowment  policy  after  the  first  policy  year  and  within  five  years  from 
date  of  issue  in  accordance  with  the  provision  in  said  standard  policy  forms, 
the  policy  issued  in  accordance  with  such  provision  may  be  considered  "  new 
insurance,"  and  to  the  agent  who  effects  the  change  may  be  paid  a  regular 
first  year  commission  and  allowed  nine  renewals.  Ruling  Ins.  Dept.,  June  9, 
1908. 

This  isection  has  no  application  to  new  business  secured  under  contracts 
entered  into  before  the  passage  of  the  law.     Ruling  Ins.  Dept.,  June  10,  1909. 

If  a  general  agent  make  a  loan  or  advance  on  behalf  of  an  insurance  com- 
pany, or  under  any  agreement  with  it,  it  is  within  the  prohibition  of  the 
statute.    Attorney-General  Rep.,  1906,  page  548. 

Foreign  life  insurance  corporations  must  conform  with  the  provisions  of 
section  97  in  regard  to  limitation  of  expenses.  Attorney-General  Rep.,  1906, 
page  549. 

This  section  does  not  apply  to  a  contract  with  an  agent  entered  into  before 
its  passage  and  should  not  be  construed  as  retroactive.  Boswell  v.  Security 
Mutual  Life  Ins.  Co.,  119  App.  Div.,  723. 


174  The  Insurance  Law.  §  97. 

Annuity  contracts,  whether  survivorship  annuities  or  not,  do  not  come 
within  the  provisions  of  §§  96,  97,  except  as  to  the  provisions  of  the  latter 
relating  to  expenses  other  than  investments.     Ruling  Ins.  Dept.,  Aug,  2,  1909. 

§  52  of  the  Domestic  Eolations  Law,  providing  that  the  portion  of  insurance 
on  a  husband's  life  purchased  by  the  excess  of  an  annual  premium  over  $500 
shall  be  liable  for  his  debts,  applies  to  a  policy  negotiated  by  a  husband  and 
payable  to  his  wife  as  well  as  to  policies  which  are  negotiated  by  the  wife  her- 
self.   Guardian  Trust  Co.  v.  Straus,  139  App.  Div.,  884. 

SINGLE  AGENT.—  This  section  added  by  chap.  328  of  1906,  limits  payment 
to  any  single  agent,  and  not  merely  the  total  expenditure  of  the  corporation; 
the  statute  deals  with  agents*  compensation  and  the  expenses  of  procuring 
new  insurance;  the  contract  of  the  agent  is  subject  to  the  condition  that  the 
corporation  shall  continue  to  transact  business  and  section  97  although  having 
the  effect  of  reducing  an  agents'  commissions  is  not  unconstitutional.  Boswell 
V.  Security  Mutual  Life  Ins.  Co.,  119  App.  Div.,  723. 

NYLIC— The  legal  relation  created  between  a  company  and  the  soliciting 
agent  by  membership  in  "  Nylic  for  Agents"  is  contractual;  prior  to  the  act 
of  1906  there  was  no  legal  obstacle  in  the  way  of  "Nylic  for  Agents;" 
"Nylic"  made  prior  to  April  27,  1906,  is  not  subject  to  the  provisions  of 
chapter  326  of  1906;  "  Nylic"  expense  should  be  classified  as  a  general  expense; 
since  the  amendments  of  sections  97  and  98  by  chapter  326  of  1906  "Nylic" 
cannot  be  continued  for  agents  employed  after  April  27,  1906.  Attorney- 
General  Rep.,  1906,  page  565. 

ADDITIONAL  COMMISSION.—  Section  97  will  not  permit  "  the  drafting  of 
a  contract  to  provide  that  the  agent  shall  receive  five  per  cent  additional  com- 
mission upon  first  annual  premium,  provided  he  secures  a  certain  amount  of 
paid-for  business  annually,  providing  the  maximum  commission  comes  within 
the  provisions  of  the  law."    Ruling  Ins.  Dept.,  June  3,  1908. 

It  would  be  unlawful  under  §  97  for  managers  of  a  company  in  various 
States  to  organize  an  association  to  contribute  a  general  fund  and  offer  prizes 
to  managers  for  the  largest  volumes  of  business  written.  Ruling  Ins.  Dept., 
Oct.  17,  1910. 

It  would  be  a  violation  of  §  97,  relating  to  bonuses,  etc.,  to  offer  any  sum  to 
an  agent  to  write  business  for  ten  consecutive  weeks  and  to  remit  with  the 
application  the  net  for  the  premium.    Ruling  Ins.  Dept.,  May  4,  1911. 

The  amendment  to  §  97  increasing  the  number  of  renewals  that  may  be  paid 
to  agents  is  not  retroactive.    Ruling  Ins.  Dept.,  Feb.  14,  1911. 

COMMUTATION  OF  RENEWALS.— Where  an  agent  has  a  guarantee  of 
two  years'  renewals  on  business  written  since  January  1,  1907,  and  desires  tr. 
commute  such  renewals,  also  a  small  amount  of  ccrmmissions  on  deferred  first 
premiums,  if  his  proposition  is  made  in  good  faith  and  he  is  desirous  of  sever- 
ing his  relations  with  his  company,  the  renewals  may  be  purchased  provided 
the  limitations  of  section  97  of  the  Insurance  Law  of  this  state  be  not  exceeded. 

If,  however,  such  plan  be  proposed  as  a  method  of  commuting  renewals  it 
would  fall  within  the  prohibition  of  the  statute.  Ruling  Ins.  Dept.,  November 
16,  1008. 

The  commutation  of  nine  renewals  of  seven  and  one-half  per  cent,  each  into 
three  renewals  of  fifteen  per  cent,  each,  with  a  further  commuted  amount  of 


§  97.  LiFE^  Health^  Casualty  Corporations.  175 

» 

thirteen  per  cent,  of  the  fourth  renewal  in  lieu  of  the  five  extra  renewals  of 
five  per  cent,  from  the  tenth  to  the  fourteenth  inclusive,  is  allowable.  Ruling 
Ins.   Dept.,  Sept.   14,  1909. 

Where  an  insurance  company's  contract  with  its  agents  provides  that  in  case 
their  contracts  are  terminated  the  company  will  pay  certain  net  renewal  com- 
missions, the  company  may  purchas'»  in  one  sum  the  said  renewal  commissions 
provided  the  total  amount  is  within  the  limitation  of  §  97.  Ruling  Ins.  Dept., 
March  27,  1911. 

The  provisions  of  §  97  which  relate  to  the  commutation  of  commissions  is 
permissive  and  not  mandatory.    Ruling  Ins.  Dept.,  Feb.  18,  1911. 

There  is  nothing  in  the  statute  prohibiting  companies  endorsing  .the  contract 
of  a  special  agent  with  a  manager  to  guarantee  carrying  out  the  renewal  agree- 
ment if  same  is  conditional  on  the  amount  of  business  written,  providwl  the 
limitations  of  §  97  be  not  exceeded.    Ruling  Ins.  Dept.,  July  27,  1910. 

COMMESSIONS. —  Where  a  company  has  made  a  saving  each  month  during 
the  first  nine  months  of  the  year  and  proposes  to  pay  out  the  accumulation 
on  business  written  and  paid  for,  for  the  tenth  month,  thus  making  the  com- 
mission from  seventeen  per  cent  to  twenty- two  per  cent  higher  than  regular 
first  year  commissions,  such  proposition  is  in  conflict  with  that  provision  of 
section  97  which  prohibits  the  payment  to  any  agent,  broker,  etc.,  of  "  any 
compensation  other  than  that  which  has  been  determined  in  advance."  Rul- 
ing Ins.  Dept.,  November  4,  1908. 

Where  a  company  made  a  saving  under  the  law  of  $150,000  on  new 
business  during  the  first  nine  months  of  the  year,  it  cannot  lawfully  pay  out 
that  saving  during  the  balance  of  the  year  by  increasing  the  commission  to 
agents,  even  providing  the  total  expended  in  that  year  for  new  business  is  not 
in  excess  of  the  amount  allowed  by  law.  A  saving  made  by  a  company  under 
the  law  should  inure  to  the  benefit  of  the  policyholders  and  may  not  be  paid 
out  to  agents  in  increased  commissions.    Ruling  Ins.  Dept.,  Nov.  4,  1908. 

The  provisions  of  section  97  of  the  Insurance  Law  governing  payments  for 
new  business  to  agents  of  life  insurance  companies  apply  to  the  payments 
made  for  the  new  business  procured  by  such  agents.  The  restrictions  apply 
to  each  agent  separately  and  by  himself,  irrespective  of  whether  the  aggregate 
payments  by  the  company  to  all  its  agents  do  or  do  not  exceed  the  statutory 
limitations.  The  compensation  of  an  agent  may  not  exceed  that  which  has 
been  determined  in  advance,  any  increased  or  additional  compensation  based 
upon  the  aggregate  of  policies  written  or  paid  for  is  prohibited.  Ruling  Ins. 
Dept.,  July  29,  1908. 

C50MMISSI0NS  — TERM  — RATED  POLICY.— "To  the  sum  of  the  loading 
on  the  term  premium  and  the  mortality  gain  on  the  term  insurance,  add  the 
loading  on  the  premium  for  the  succeeding  contract  also  the  present  value  of 
the  assumed  mortality  gains  for  the  first  five  years  of  insurance  on  such  con- 
tract (its  first  premium  or  an  instalment  thereof  having  been  received  during 
the  calendar  year  for  which  the  computation  is  made)  the  result  will  be  the 
total  margins  allowed  by  section  97  of  the  Insurance  Law  for  commissions,  etc., 
on  the  term-rated  policy."    Ruling  Ins.  Dept.,  May  26,  1908. 

TRAVELING  EXPENSES.— Traveling  expenses  paid  to  soliciting  agents 
are  not  to  be  charged  against  the  margin  allowed,  for  the  expenses  of  first 


176  The  Insurance  Law.  §  97. 

year's  business,  but  from  part  of  the  expenses  to  be  taken  out  i  the  actual 
loading  on  the  total  premiums  received."    Ruling  Ins.  Dept.,  June  11,  1908. 

Under  section  97  three  per  cent  of  the  extra  renewal  commissions  allowed 
from  the  tenth  to  the  fourteenth  year,  inclusive,  cannot  be  commuted  into  an 
extra  four  and  one-half  per  cent  payable  on  the  first  renewal  (making  twelve 
per  cent  on  such  renewal)  nor  can  such  three  per  cent  renewal  commissions  be 
commuted  into  an  extra  two  and  one -half  per  cent  on  both  the  first  and  second 
renewals  (making  ten  per  cent  on  the  first  and  second  renewals).  This  would 
mean  that  seven  and  one-half  per  cent  in  each  case  would  be  paid  on  the  bal- 
ance of  the  first  nine  renewals  and  two  per  cent  commission  or  collection 
fee  beginning  with  the  tenth  renewal.    Ruling  Ins.  Dept.,  May  14,  1909. 

Section  97  limits  the  rate  and  number  of  renewal  commissions  which  may 
be  paid  to  agents  by  life  insurance  companies;  it  does  not  require  that  the 
full  number  of  renewals  allowed  by  law  be  paid  in  each  case.  Ruling  Ins. 
Dept.,  Dec.  27,  1909. 

Renewal  commissions  of  seven  and  one-half  per  cent,  on  life  policies  and 
endowments,  providing  for  twenty  or  more  premiums,  and  five  per  cent,  on 
endowments,  providing  for  less  than  twenty  premiums  during  the  eleventh  and 
twelfth  year,  and  a  collection  fee  of  three  per  cent,  thereafter  is  allowable. 
Ruling  Ins.  Dept.,  Sept.  17,  1909. 

The  temporary  enjoyment  of  a  reward  of  efficiency  that  brings  no  pecuniary 
return  to  an  agent  does  not  come  within  the  prohibition  of  this  section.  Ruling 
Ins.  Dept.,  Dec.  19,  1910. 

Under  §  97,  a  company  may  not  offer  an  honor  prize  of  $250  in  gold  to  be 
awarded  upon  the  persistence  of  effort  and  continuity  of  purpose  as  evidenced 
by  an  agent  and  not  dependent  on  the  volume  of  policies  written.  Ruling  Ins. 
Dept.,  Dec.  30,  1910. 

A  corporation  cannot  in  addition  to  the  renewal  commissions  provided  for  in 
§  97  for  the  first  14  policy  years  allow  the  agent  a  collection  fee  not  exceeding 
three  per  cent.    Ruling  Ins.  Dept.,  Feb.,  1911. 

It  is  not  objectionable  under  §  97  to  award  a  button  of  trifling  cost  to 
agents  who  write  a  certain  amount  of  ordinary  business  within  a  year  or  to 
make  them  members  of  a  club  under  a  denomination  indicating  the  amount 
of  business  written,  such  membership  to  involve  only  public  mention,  the 
award  of  a  certificate  and  the  giving  of  a  button  of  small  cost.  Ruling  Ins. 
Dept.,  April  28,  1911. 

Where  under  a  contract  for  commissions,  the  same  are  payable  to  the  estate 
of  the  agent  in  case  of  death,  the  bank  exchange  in  collecting  renewal  pre- 
miums should  not  be  paid  by  the  insurer  but  should  be  made  a  charge  against 
the  renewals  to  be  paid  to  the  estate.    Ruling  Ina.  Dept.,  March  4,  1911. 

The  language  "  on  its  behalf  "  prohibits  payment  by  any  person  on  belialf 
of  the  company  for  forbidden  purposes.     Ruling  Ins.  Dept.,  Aug.  22,  1907. 

A  mutual  life  company  may  not  give  a  subscription  to  anti- tuberculosis 
league.     Ruling  Ins.  Dept.,  Oct.  18,  1911 

Computations  for  expenses  are  to  be  made  by  calendar  years  and  .should 
not  include  fractional  payments  made  on  issue  of  previous  year,  but  issues  of 
^he  year  in  question,  to  be  received  the  following  year.  Ruling  Ins.  Dept.. 
June  29,  1906. 


§  97.  LiFE^  Health^  Casualty  CoRroRATiONS.  177 

What  are  to  be  included  in  first  year's  expense  limitations.  Ruling  Ins. 
Dept.,  June  3,  1915. 

Limitation  on  margins  for  expenses  on  term  policies  restricting  expenses  to 
the  maximum  value  at  any  age  of  the  office  premium  less  one-half  of  the 
net  single  premium  for  one  year's  term  insurance  on  the  basis  of  American 
3%  per  cent,  which  assumes  the  mortality  in  the  first  year  of  insurance  as  50 
per  cent  of  the  tabular  rate  in  accordance  with  section  84  approved.  Ruling 
Ins.  Dept.,  Oct.  29,  1906. 

Date  of  changed  policy  controlling  factor  in  regard  to  subjecting  terra 
policy  to  limitation  of  expenses  thereon.     Ruling  Ins.  Dept.,  March  5,  1907. 

Loadings  on  annuity  contracts  should  be  included  in  calculating  the  first 
year's  expenses.     Ruling  Ins.  Dept.,  July  26,  1907. 

Where  an  advance  payment  is  made  less  in  amount  than  a  quarterly 
premium  of  the  policy  applied  for,  such  advance  payment  is  '"  an  installment  " 
within  the  meaning  of  section  97.     Ruling  Ins.  Dept.,  July  9,  1906. 

Computations  relating  to  first  year's  expenses  should  be  based  on  the 
Am.  Ex.  3^  per  cent  select  and  ultimate  table,  both  as  to  loadings  on  premiums 
and  the  present  values  of  assumed  mortality  gains.  Ruling  Ins.  Dept.,  Nov.  6, 
1907. 

Expense  allowances  are  limited  to  gains  realized  by  the  select  and  ultimate 
method  of  valuation.    Ruling  Ins.  Dept.,  Xov.  21,  1907. 

Select  and  ultimate  method  is  not  to  be  applied  to  a  reinsurance  contract. 
Attorney-General  Rep.,  July  22,  1909;   Sept.  13,  1909. 

Traveling  expenses  of  soliciting  agents  are  not  chargeable  against  the 
margin  allowed   first-year  business.     Ruling  Insi.  Dept.,  Aug.   10,   1906. 

It  is  immaterial  whether  the  insurance  contract  be  made  with  general 
agents  or  sub-agents  so  long  as  the  limitations  of  the  section  be  not  exceeded. 
Ruling  Ins.  Dept.,  Jan.  14,  1907. 

The  section  proihibits  the  payment  to  a  soliciting  agent  of  any  sum  of 
money  in  excess  of  the  limitation  set  forth.    Ruling  Ins.  Dept.,  Aug.  20,  1907. 

The  statute  does  not  require  the  payment  of  certain  commissions,  but  does 
require  that  they  be  not  exceeded.    Ruling  Ins.  Dept.,  June  21,  1911. 

The  issuing  of  insurance  policies  through  mail  order  house  is  prohibited. 
Ruling  Ins.  Dept.,  Feb.  19,  1909. 

An  agent  employed  on  a  commission  is  not  entitled  to  any  other  com- 
pensation.    Ruling  Ins.  Dept.,  Nov.   14,  1907. 

Commissions  are  not  to  be  paid  to  clerks  regularly  employed  under  a 
salary.     Ruling  Ins.  Dept.,  March  2,  1908. 

The  section  does  not  prdhibit  contracts  by  which  no  commission  shall  be 
paid  unless  a  given  amount  of  business  is  written,  provided  the  commissions 
do  not  exceed  the  amount  fixed  by  the  statute.  Ruling  Ins.  Dept.,  Dec.  20. 
1906. 

The  statute  prohibits  the  giving  of  prizes  to  sub-agents  based  on  tlie 
amount  of  business  written.     Ruling  Ins.  Dept.,  July  27,  1910. 

Extra  commissions  based  on  the  amount  of  new  business  prohibited  by 
this  section.     Ruling  Ins.  Dept.,  Jan.  21,  1911. 

Salaries  based  on  the  amount  of  new  business  secured  mu^t  be  charged  to 
cost  of  new  business.     Ruling  Ins.  Dept.,  Dec.   17,  1910. 


178  *  The  Insueance  Law.  §  97. 

This  statute  prohibits  the  payment  of  traveling  expenses'  of  an  a^ent  to  a 
convention  as  a  reward  for  writing  a  certain  amount  of  business.  Ruling 
Ins.  Dept.,  Jan.  3,  1907. 

The  necessary  traveling  expenses  of  agents  procuring  new  business,  etc., 
may  be  paid  provided  the  company  keeps  within  the  limitations  of  section  97. 
Palling  Ins.  Dept.,  July  16,  1913. 

An  officer  may  insure  his  life  in  his  company,  if  no  rebate  is  granted  or 
commission  paidl     Ruling  Ins^  Dept.,  Dec.  3,  1906. 

Prize  systems  and  general  agency  trophies  are  prohibited  by  this  section. 
Ruling  Ins.  Dept.,  Nov.  1,   1906. 

Honor  rolls  or  other  reward  of  merit,  not  involving  any  pecuniary  return 
to  the  agent,  is  not  prohibited.    Ruling  Ins.  De,pt.,  Nov.  19,  1906. 

Renewal  commissions  paid  to  the  treasurer  of  Grange  whose  members  also 
receive  commissions  as  agents  of  the  life  insurance  company  is  not  rebating. 
Ruling  Ins.  Dept.,  May  13,   1915. 

A  new  policy  issued  in  accordiance  with  a  privilege  granted  in  a  term  policy 
is  new  insurance  and  the  difference  in  commission  and  nine  renewals  can 
be  paid  thereon.     Ruling  Ins.  Dept.,  Feb.  21,  1908. 

Renewal  commissions  to  sub-agents  based  on  the  amount  of  business  is 
prohibited.     Ruling  Ins.  Dept.,  Dec.  27,  1910. 

A  life  insurance  compa,ny  may  purchase  renewals  under  contracts  ante- 
dating enactment  of  section.     Ruling  Ins.  Dept.,  Oct.  30,  1906. 

The  amendment  of  1909,  allowing  additional  renewal  commissions,  is  not 
retroactive.    Ruling  Ins.  Dept.,  June  26,  1909. 

A  company  may  not  commute  renewal  commissions  and  add  the  commuted 
amount  to  the  commissions  on  first  year's  premiums.  Ruling  Ins.  Dept.,  Sept. 
21,  1906. 

The  approval  of  the  superintendent  of  insurance  is  not  required  for  com- 
mutation less  than  the  rate  already  approved.  Ruling  Ins.  Dept.,  March  20, 
1909. 

The  payment  to  a  general  agent  of  salary  for  supervising  a  certain  territory 
outside  of  his  general  agency  district  isi  a  question  of  good  faith.  Ruling 
Ins.  Dept.,  July  13,  1914. 

A  general  agent  who  makes  loans  to  a  soliciting  agent  in  the  same  company 
is  making  loans  on  behalf  of  the  company.    Ruling  Ins.  Dept.,  March  31,  1909. 

Advances  to  agents  on  sole  security  of  compensation  to  be  earned  by  writ- 
ing new  business  is  allowedl    Ruling  Ins.  Dept.,  Oct.  5,  1907. 

Advances  against  renewal  commissions  are  prohibited.  Ruling  Ins.  Dept., 
Dec.  20,  1906. 

The  last  sentence  of  this  section  applies  to  life  insurance  corporations  of 
other  states.     Ruling  Ins.  Dept.,  Oct.  5,  1906. 

The  limitation  applies  to  general  agents  of  foreign  companies  authorized  to 
do  business  in  tlhis  State  wherever  saidl  agents'  may  be  located.  Ruling  Ins. 
Dept.,  Oct.  7,  1907. 

A  conxpany  of  this  state  reinsuring  business  of  a  foreign  corporation  may 
not  assume  contracts  to  pay  first-year  and  renewal  commissions  in  excess  of 
the  maximum  allowed  by  the  section.    Ruling  Ins.  Dept.,  Oct.  9,  1011. 

A  stock  company  is  not  relieved  from  the  limitations  as  to  renewal  com- 
missions.   Ruling  Ins.  Dept.,  June  4,  1907. 

The  first  payment  of  renewal  commissions  may  not  be  added  to  the  flrat 
year's  commissions.     Ruling  Ins.  Dept.,  July  8,  1909. 


§  98.  LiFE^  Health^  Casualty  Corporations.  179 

Under  the  provisions  of  section  97,  "  salaries  paid'  in  good  faith  for  agency 
supervision  "  are  not  charged  to  new  business.    Ruling  Ins.  Dept.,  Dec.  3,  1915. 

EXPENDITURES. —  Expenses  of  examination  of  a  life  insurance  company 
by  the  state  examiners  are  not  such  as  are  limited  by  §  97.  Ruling  Ins.  Dept., 
Feb.  4,  1910. 

Section  97  limits  the  expenditure  of  a  life  insurance  company  for  new 
business,  but  does  not  require  the  payment  of  any  certain  part  or  the  whole 
of  the  largest  commission  which  may  be  found  permissible  under  the  section 
referred  to.    Ruling  Ins.  Dept.,  Sept.  29,  1909. 

Section  97  is  not  a  limitation  of  the  aggregate  expenditure  which  can  be 
made  by  life  insurance  companies,  but  applies  to  each  particular  agent  and 
limits  the  amount  which  may  be  paid  to  him  to  a  certain  proportion  of  the 
first  premiums  received  by  him.  This  does  not  limit  the  amount  whicb  may 
be  paid  to  agents  acting  under  contracts  executed  prior  to  the  enactment  of 
the  section  which  have  a  definite  period  to  run.  Attorney-General's  Rep., 
June  10,  1909. 

The  provision  of  section  97  that  "(b)  the  present  values  of  the  assumed 
mortality  gains  for  the  first  five  years  of  insurance  on  policies  in  force  at  the 
end  of  said  calendar  year  on  which  the  first  premium,  or  instalment,  has  been 
received  during  said  calendar  year,  etc.,"  will  not  permit  the  repeated  taking 
of  credits  for  assumed  mortality  gains  on  a  One  Year  Renewable  Term 
Policy.     Ruling  Ins.  Dept.,  Feb.  25,  1915. 

SERVICES. —  The  services  rendered  by  a  tarmer  in  driving  an  agent  about 
soliciting  insurance  are  not  such  as  are  comprehended  in  §  97;  where  a  policy- 
holder refers  to  some  friend  wanting  insurance  and  is  paid  a  bonus  for  the 
information,  such  service  is  comprehended  in  the  statute.  Ruling  Ins.  Dept., 
Jan.  24,  1910. 

§  98.  Salaries  of  officers  and  agents;  when  fixed  by  board 
of  directors. 

"No  domestic  life  insurance  corporation  shall  pay  any  salary, 
compensation  or  emolument  to  any  officer,  trustee  or  directoi 
thereof,  nor  any  salary,  compensation  or  emolument  amounting  in 
any  year  to  more  than  five  thousand  dollars  to  any  person,  firm  or 
corporation  unless  such  payment  be  first  authorized  by  a  vote  of 
the  board  of  directors  of  such  life  insurance  corporation.  No 
such  life  insurance  corporation  shall  make  any  agreement  with 
any  of  its  officers,  trustees  or  salaried  employees  whereby  it  agre«-s 
that  for  any  services  rendered  or  to  be  rendered  he  shall  receive 
any  salary,  compensation  or  emolument  that  will  extend  beyond 
a  period  of  twelve  months  from  the  date  of  such  agreement.  No 
'^uch  corporation  shall  grant  any  pension  to  any  officer,  director 
or  trustee  thereof  or  to  any  member  of  his  family  after  his  death. 


180  The  Insurance  Law.  §§  99,   100. 

Source. — Former  §  98,  as  added  by  L.  1906,  chap,  320. 

{Since  the  amendments  of  sections  97  and  98  by  chapter  326  of  1906,  "  Nylic  *' 
cannot  be  continued  for  agents  employed  after  April  27,  1906.  Attomey- 
Ueneral  Rep.,  1906,  page  565. 

Salaries  of  officers  of  an  insurance  company  must  be  fixed  at  least  once 
every  j^ear.     Ruling  Ins.  Dept.,  July  27,  1909. 

Under  section  98,  a  domestic  life  insurance  company  may  establish  a  pension 
fund  for  its  employees  other  than  officers  and  directors,  but  there  must  not  be 
any  contractual  relations  between  the  company  and  the  employees  as  to  a 
pension  fund,  that  is,  no  contract  may  be  made  or  extended  with  any  pro- 
vision to  the  effect  that  the  employee  shall  participate  in  the  pension  fund  as  a 
consideration  for  his  employment.  The  pension  fund  must  be  voluntary  on 
the  part  of  the  company,  and  established  in  such  manner  that  it  can  be  dis- 
continued or  terminated  at  any  time,  and  that  if  so  discontinued  or  termi- 
nated, the  employee  shall  have  no  cause  of  action  against  the  company.  Rul- 
ing Ins.  Dept.,  September  30,  1908. 

An  insurance  company  may  esitablish  a  pension  fund  for  employees  other 
than  officers  and  directors.     Ruling  Ins.  Dept.,  Oct.   1,  1908. 

A  prohibition  as  to  pensioning  officers  applies  to  the  president,  vice-presi- 
dent, 2nd  vice-president,  etc.,  in  fact  all  who  are  officers  established  officially 
by  the  company's  ow^n  by-laws.     Ruling  Ins.  Dept.,  May  17,  1915. 

§  99.    Vouchers-  \  ■ 

No  domestic  life  insurance  corporation  shall  make  any  disburse^ 
ment  of  one  hundred  dollars  or  more  unless  the  same  be  evidenced 
by  a  voucher  signed  by  or  on  behalf  of  the  person,  firm  or  corpo- 
ration receiving  the  money  and  correctly  describing  the  consider- 
ation for  the  payment,  and  if  the  same  be  for  services  and  dis- 
bursements setting  forth  the  services  rendered  and  an  itemized 
statement  of  the  disbursements  made,  and  if  it  be  in  connection 
with  any  matter  pending  before  any  legislative  or  public  body  o\ 
before  any  department  or  officer  of  any  government,  correctl.y 
describing  in  addition  the  nature  of  the  matter  and  of  the  inter- 
est of  such  corporation  therein,  or  if  such  a  voucher  cannot  be 
obtained  by  an  affidavit  stating  the  reasons  therefor  and  setting 
forth  the  particulars  above  mentioned. 

Source.— Former  §  99,  as  added  by  L.  1906,  chap.  326. 

§  100.    Investments. 

TTo  domestic  life  insurance  corporation,  whether  incorporated 
by  special  act  or  under  a  general  law,  shall  invest  in  or  loan  upon 
any  shares  of  stock  of  any  corporation,  other  than  a  municipal  cor- 
poration, nor,  excepting  government,  state  or  municipal  securities, 


§   100.         LiFE^  Health^  Casualty  Corporations.  18,1 

shall  it  invest  in,  or  loan  upon,  aJiy  bonds  or  obligations  which  shall 
not  be  secured  by  adequate  collateral  security  or  where  more  than 
one-third  of  the  total  value  of  the  collateral  security  therefor  shall 
consist  of  shares  of  stock.  Every  such  corporation  which  on  the 
first  day  of  June,  nineteen  hundred  and  six,  owned  any  shares  of 
stock  other  than  public  stocks  of  municipal  corporations  when- 
ever the  same  were  acquired,  or  any  bonds  or  obligations  of 
the  kinds  above  described  where  said  bonds  or  obligations  were 
acquired  after  the  first  day  of  March,  nineteen  hundred  and 
six,  shall  dispose  of  the  said  shares  of  stock  and  of  said  bonds 
and  obligations  within  fifteen  years  from  the  thirty-first  day  of  De- 
cember, nineteen  hundred  and  six,  and  in  each  year  prior  to  the  ex- 
piration of  said  fifteen  years  shall  make  such  reduction  of  its  hold- 
ings of  said  securities  as  may  be  approved  in  writing  by  the  super- 
intendent of  insurance.  'No  investment  or  loan  shall  be  made  by 
any  such  life  insurance  corporation  unless  the  same  shall  first 
have  been  authorized  by  the  board  of  directors  or  by  a  committee 
thereof  charged  with  the  duty  of  supervising  such  investment  or 
loan.  No  such  corporation  shall  subscribe  to  or  participate  in 
any  underwriting  of  the  purchase  or  sale  of  securities  or  prop- 
erty, or  enter  into  any  transaction  for  such  purchase  or  sale  on 
account  of  said  corporation  jointly  with  any  other  person,  firm 
or  corporation;  nor  shall  any  such  corporation  enter  into  any 
agreement  to  withhold  from  sale  any  of  its  property,  but  the 
disposition  of  its  property  shall  be  at  all  times  within  the  con- 
trol of  its  board  of  directors.  Any  such  corporation,  in  addition 
to  other  investments  allowed  by  law,  may  invest  any  of  its  funds 
in  any  duly  authorized  bonds  or  evidences  of  debt  of 
any  government  in  which  such  corporation  is  transacting 
business,  or  of  any  state,  or  of  any  city,  county, 
town,  village,  school  district,  municipality  or  other  civil 
division  of  any  state  and  may  loan  upon  the  security  of  improved 
unencumbered  real  property  in  any  state  worth  fifty  per  centum 
more  than  the  amount  loaned  thereon.  Provided,  however,  that 
nothing  in  this  section  contained  shall  be  construed  as  prohibiting 
a  life  insurance  company  from  entering  into  an  agreement  for  the 
purpose  of  protecting  the  interests  of  the  company  in  securities 
lawfully  held  by  it,  or  for  the  purpose  of  reorganization  of  a  cor- 


\ 


182  The  Insurance  Law.  §  100. 

poration  wliich  issued  securities  so  held,  and  from  depositing  such 
securities  with  a  committee  or  depositaries  appointed  under  such 
agreement ;  but  such  agreement  and  the  deposit  of  securities  there- 
under must  first  be  approved  in  writing  by  the  superintendent 
of  insurance  with  a  statement  of  his  reasons  for  such  approval. 
Nor  shall  this  section  be  construed  as  preventing  such  company 
from  accepting  corporate  stock  or  bonds  or  other  securities,  which 
may  be  distributed  pursuant  to  any  such  agreement  approved  as 
aforesaid  or  to  any  plan  of  reorganization  approved  in  writing 
oy  the  superintendent  of  insurance  with  a  statement  of  his  reason 
for  such  approval.  But  if  any  securities  so  received  shall  consist 
in  whole  or  in  part  of  stock  in  any  corporation  or  of  bonds  or 
obligations  which  shall  not  be  secured  by  adequate  collateral 
security  or  where  more  than  one-third  of  the  total  value  of  the 
collateral  security  therefor  shall  consist  of  shares  of  stock,  then 
any  stock  and  any  such  bond  or  obligation  so  received  shall  be 
disposed  of  within  five  years  from  the  time  of  their  acquisition 
or  before  the  expiration  of  such  further  period  or  periods  of  time 
as  may  be  fixed  in  writing  for  that  purpose  by  the  superintendent 
of  insurance. 

Source. — Former  §  100,  as  added  by  L.  1906,  cliap.  326,  and  amended  by  L. 
1908,  chap.  9. 

Amended  by  L.  1911,  chap.  767;  L.  1913,  chap.  596,  and  L.  1916,  chap.  121. 
In  effect  April  3,  1916. 

Nate. —  The  purpose  of  the  amendment  of  this  section  by  chap.  121  of  1916 
extends  from  ten  to  fifteen  years  the  time  for  reducing  holdings  of  bonds  and 
obligations. —  Ed. 

Note. — ^The  purpose  of  the  amendment  of  this  section  by  ohap.  596  of  1913 
was  to  authorize  domestic  insurarce  companies  to  invest  their  funds  in  the 
bonds  of  any  government  in  which  said  corporation  is  transacting  business  or 
of  any  State  and  the  amendment  is  in  harmony  with  the  general  investment 
section  of  the  Insurance  Law  (section  16)  as  amended  by  chap.  304  of  1913. — 
Ed. 

The  Department  of  Insurance  should  not  admit  as  a  legal  investment  any 
amount  represented  by  a  second  purchase  money  mortgage  held  by  an  insur- 
ance company  where  the  first  purchase  money  mortgage  previously  held  by 
said  company  has  been  disposed  of.     Attorney-General  Rep.,  March  23,  1915. 

A  domestic  life  insurance  company  may  invest  its  surplus  moneys  in  car 
trust  certificates  of  Pennsylvania  Steel  Freight  Car  Trust.  Attorney-General 
Rep.,  1906,  page  577. 

An  insurance  company  holding  the  stock  of  two  trust  companies  acquired 
before  chapter  326  of  1906  went  into  effect,  may  vote  upon  the  stock  so  held 
upon  a  proposition  for  the  merger  of  the  trust  companies;  during  the  period 


§  101.         LiFE^  Health^  Casualty  Corpoeations.  183 

of  ownership  permitted  by  section  100  the  title  of  an  insurance  company  to 
the  stock  is  perfect  and  confers  upon  it  the  same  privileges,  responsibilities 
and  duties  as  those  of  any  other  stockholder.  Morse  v.  Equitable  Life  Asa. 
Soc,  124  App.  Div.,  235. 

Although  section  100,  as  amended  by  chapter  326  of  1906,  requires  life  insur- 
ance companies  to  sell  their  stocks  in  any  corporation  before  December  31, 
1911,  yet  before  that  time  an  insurance  company  may  vote  on  the  stock  of  two 
trust  companies  owned  by  it.  Morse  v.  Equitable  Life  Assur.  Soc,  124  App. 
Div.,  235. 

Salea  of  stock  or  corporate  obligations  by  domestic  life  insurance  corpora- 
tions to  parties  who  pay  therefor  in  part  or  wliole  by  promissory  notes 
secured  by  a  pledge  of  such  stocks  of  corporations,  are  illegal.  Attorney- 
General  Rep.,  March  4,  1908. 

Sections  16  and  100,  read  together,  limit  the  collateral  which  may  be 
accepted  to  such  securities  as  the  corporation  is  authorized  to  invest  its 
surplus  funds  in.  The  provision  of  section  100  that  a  corporation  shall  not 
loan  upon  any  bonds  or  obligations  which  shall  not  be  secured  by  adequate 
collateral  securities  applies  to  those  bonds  and  obligations  of  private  corpora- 
tions whose  issue  is  based  upon  the  deposit  of  shares  of  stock.  Ruling  Ins. 
Dept.,   Sept.   6,   1906. 

Mere  unsecured  additional  promises  of  parties  already  liable  to  pay  bonds 
are  not  collateral  security  within  the  meaning  of  this  section.  Attorney- 
General  Rep.,  Aug.  9,  1911. 

Railway  equipment  notes  issued  under  conditional  sale  agreements  for  the 
payment  of  which  a  solvent  corporation  of  the  United  States,  or  a  state, 
is  liable  when  property  issued  and  sufficiently  secured  are  legal  investments 
under  sections  16  and  100  of  the  Insurance  Law,  for  investing  the  surplus 
funds.     Attorney- General  Rep.,  June  16,  1913. 

The  investment  in  railroad  collateral  improvement  notes  is  prohibited  under 
the  provisions  of  this  section.     Ruling  Ins.  Dept.,  May  18,  1906. 

Life  insurance  corporations  of  this  state  can  invest  in  government  bonds 
of  those  foreign  countries  only  in  wliich  they  transact  business;  the  words 
"  adequate  collateral  security  "  apply  to  bonds  or  obligations  of  private  cor- 
porations whose  issue  is  based  upon  deposit  of  shares  of  stock  and  not  mere 
additional  promises  of  parties  already  liable.    Ruling  Ins.  Dept.,  Sept.  6,  1906. 

The  acquisition  by  a  company,  as  a  consequence  of  a  sale  of  securities, 
which  must  be  sold,  of  certain  other  securities  in  whidh  the  company  must 
not  invest,  is  an  investment  under  section  100  and  rests  in  the  administrative 
discretion  of  the  Superintendent.    Attorney -General  Rep.,  Dec.  16,  1911. 

§  101.    Standard  provisions. 

On  and  after  January  first,  nineteen  hundred  and  ten,  no 
policy  of  life  or  endowment  insurance  shall  he  issued  or  delivered 
in  this  state  unless  and  until  a  copy  of  the  form  thereof  has  heen 
filed  with  the  superintendent  of  insurance  and  approved  hy  him ; 
nor  shall  such  policy,  except  policies  of  industrial  insurance  where) 


184  The  Insurance  Law.  §   101. 

tlio  proiniunis  are  payable  weekly,  be  so  issued  or  deliv^ered  unless 
it  coittaiTis  in  substance  tbe  following  provisions: 

1.  A  provision  that  tlio  insured  is  entitled  to  a  grace  either  of 
thirty  days  or  of  one  month  within  which  the  payment  of  any 
premium  after  the  first  year  may  be  made,  subject  at  the  option 
of  the  company  to  any  interest  charge  not  in  excess  of  six  per 
centum  per  annum  for  the  number  of  days  of  grace  elapsing 
before  the  payment  of  the  premium,  during  which  period  of  grace 
the  policy  shall  continue  in  full  force,  but  in  case  the  policy  be- 
comes a  claim  during  the  said  period  of  grace  before  the  overdue 
premium  or  the  deferred  premiums  of  the  current  policy  year 
if  any  are  paid,  the  amount  of  such  premiums,  with  interest  on 
any  overdue  premium,  may  be  deducted  from  any  amount  pay- 
able under  the  policy  in  settlement. 

2.  A  provision  that  the  policy  shall  be  incontestable  after  two 
years  from  its  date  of  issue  except  for  nonpayment  of  premiums 
and  except  for  violation  of  the  conditions  of  the  policy  relating 
to  military  or  naval  service  in  time  of  war. 

3.  A  provision  that  the  policy  shall  constitute  the  entire  con- 
tract between  the  parties,  but  if  the  company  desires  to  make  the 
application  a  part  of  the  contract  it  may  do  so  provided  a  copy 
of  such  application  shall  be  indorsed  upon  or  attached  to  the 
policy  when  issued,  and  in  such  case  the  policy  shall  contain  a 
provision  that  the  policy  and  the  application  therefor  shall  con- 
stitute the  entire  contract  between  the  parties. 

4.  A  provision  that  if  the  age  of  the  insured  has  been  misstated 
the  amount  payable  under  the  policy  shall  be  such  as  the  premium 
would  have  purchased  at  the  correct  age. 

5.  A  provision  that  the  policy  shall  participate  in  the  surplus 
of  the  company  annually. 

6.  A  provision  specifying  the  options  to  which  the  policy- 
holder is  entitled  in  the  event  of  default  in  a  premium  payment 
after  three  full  annual  premiums  shall  have  been  paid. 

7.  A  provision  that  after  three  full  years'  premiums  have  been 
paid,  the  company  at  any  time,  while  the  policy  is  in  force,  will 
advance,  on  proper  assignment  or  pledge  of  the  policy  and  on  tlie 
sole  security  thereof,  at  a  specified  rate  of  interest,  a  sum  equal 


§   lOil.         LiFE^  Health^  Casualty  Cokpokations.  185 

to,  or  at  the  option  of  the  owner  of  the  policy  less  than,  the  reserve 
at  the  end  of  the  current  policy  year  on  the  policy  and  on  any 
dividend  additions  thereto,  less  a  sum  not  more  than  two  and  one- 
half  per  centum  of  the  amount  insured  by  the  policy  and  of  any 
dividend  additions  thereto;  and  that  the  company  will  deduct 
from  such  loan  value  any  existing  indebtedness  on  the  policy  and 
any  unpaid  balance  of  the  premium  for  the  current  policy  year, 
and  may  collect  interest  in  advance  on  the  loan  to  the  end  of  tlie 
current  policy  year;  which  provision  may  further  provide  that 
such  loan  may  be  deferred  for  not  exceeding  six  months  after  the 
application  therefor  is  made.  A  company  may,  in  lieu  of  the  pro- 
vision hereinabove  permitted  for  the  deduction  from  a  loan  on  the 
policy  of  a  sum  not  more  than  two  and  one-half  per  centum  of 
the  amount  insured  by  the  policy  and  of  any  dividend  additions 
thereto,  insert  in  the  policy  a  provision  that  one-fifth  of  the  entire 
reserve  may  be  deducted  in  case  of  a  loan  under  the  policy,  or 
may  provide  therein  that  the  deduction  may  be  the  said  two  and 
one-half  per  centum  or  the  one-fifth  of  the  said  entire  reserve  at 
the  option  of  the  company. 

8.  A  table  showing  in  figures  the  loan  values,  if  any,  and  the 
options  available  under  the  policy  each  year  upon  default  in  pre- 
mium payments,  during  at  least  the  first  twenty  years  of  the 
policy. 

9.  In  case  the  proceeds  of  a  policy  are  payable  in  installments 
or  as  an  annuity,  a  table  showing  the  amounts  of  the  installments 
or  annuity  payments. 

10.  A  provision  tliat  the  holder  of  a  policy  shall  be  entitled  to 
have  the  policy  reinstated  at  any  time  within  three  years  from  the 
date  of  default  unless  the  cash  value  has  been  duly  paid,  or  the 
extension  period  expired,  upon  the  production  of  evidence  of  in- 
surability satisfactory  to  the  company  and  the  payment  of  all  over- 
due premiums  and  any  other  indebtedness  to  the  company  upon 
said  policy  with  interest  at  a  rate  not  exceeding  six  per  centum 
per  annum  payable  annually. 

Any  of  the  foregoing  provisions  or  portions  thereof  not  appli- 
cable to  single  premium  or  nonparticipating  or  term  policies  shall 
to  that  extent  not  be  incorporated  therein;  and  any  such  policy 
may  be  issued  or  delivered  in  this  state  which  in  the  opinion  of 


186  The  Insueance  Law.  §  101. 

the  superintendent  of  insurance  contains  provisions  on  any  one  or 

more  of  the  several  foregoing  requirements  more  favorable  to  the 

policyholder  than  hereinbefore  required.     The  provisions  of  this 

section  shall  not  apply  to  policies  of  reinsurance. 

Source.— Former  §  101,  as  added  by  L.  1906,  chap.  326,  and  amended  by  L. 
1907,  ohap.  714. 

Added  by  L.  1909,  chap.  301,  and  amended  by  L.  1911,  chap.  369. 

Note. —  This  section,  added  by  L.  1909,  chap.  301,  substituted  for  the  four 
standard  life  policies,  the  use  of  which  by  domestic  life  companies  was  pre- 
viously required,  certain  standard  provisions  which  will  'hereafter  be  used 
in  the  policy  contracts  of  all  life  companies,  domestic  or  foreign,  doing  busi- 
ness in  New  York, —  Ed. 

Policy  Forms.     Bides  —  N.  Y.  Ins.  Dept. 

"  1.  Preliminary  filing.  A  company  should)  file  two  fair  printer's  proof  copies 
of  any  new  policy  form  for  preliminary  examination,  in  order  that  the  form 
may  be  given  due  consideration  and  any  defects  therein  pointed  out  and  cor- 
rected before  it  is  printed  for  formal  submission  and  filing. 

"  2.  Formal  filing.  When  a  policy  form  has  been  drafted,  completed  and 
printed  in  accordance  with  the  requirements  of  the  statute  and  of  these  rules, 
it  should  be  submitted  in  triplicate,  accompanied  by  three  (3)  copies  of  the 
application,  and  the  same  number  of  copies  of  any  other  supplementary  forms 
which  will  be  necessary  parts  of  the  insurance  contract. 

"3.  Forms  to  he  filled  out.  Each  policy  form,  application  blank  and  supple- 
mental form,  when  thus  submitted  for  formal  approval,  must  be  filled  out  com- 
plete, with  fictitious  names  and  hypothetical  data  appropriate  to  the  partic- 
ular form,  so  that  there  will  be  no  blank  spaces.  In  ordinary  cases,  it  is  sug- 
gested that  forms  be  filled  out  as  of  age  35,  but  in  the  case  of  suib-standard 
risks  or  rated-up  ages  forms  may  be  filled  out  as  of  age  30  or  35,  and  rated 
up  to  the  age  required. 

"  4.  Form  number.  Each  form  of  policy  submitted  to  the  Department  for 
approval  must  be  designated  by  a  form  number  printed  at  the  lower  left-hand 
corner  of  t'he  first  page  thereof.  The  form  number  alone  should  be  sufficient 
to  identify  the  form  and  all  its  printed  contents,  without  reference  to  the  date 
of  the  edition  or  date  of  printing. 

"  5.  Descriptive  matter.  A  brief  description  of  the  true  nature  of  the  policy 
should  be  printed  on  the  first  page,  at  the  foot  of  the  page. 

"  6.  Reserve  basis.  The  reserve  basis,  mortality  table  and  rate  of  interest, 
used,  must  be  stated  in  the  policy.  Usually  the  reserve  basis  should  be  set 
forth  in  connection  with  the  non- forfeiture  values,  but  this  rule  applies  to 
term  forms,  annuities,  and  other  forms  in  which  non -forfeiture  values  are  not 
required. 

"  7.  Surrender  charge.  The  amount  of  the  surrendier  charge,  if  any,  must  be 
stated  in  the  policy.  It  is  sufficient  to  state  the  maximum  amount  of  the 
surrender  charge,  naming  the  policy  year,  with  the  further  statement  that 
such  surrender  charge  will  decrease  until  a  certain  policy  year,  naming  it, 
after  which  there  will  be  no  surrender  charge.    The  table  of  loan  values  must 


§  101.         Life,  Health^  Casualty  Corporations.  187 

show  the  full  reserve  to  cents  for  those  policy  years  in  wHiich,  by  the  terms  of 
the  policy,  there  is  no  surrender  charge,  and  for  the  same  policy  years  the 
term  of  extended  insurance  should  be  shown  for  years  and  days. 

"  8.  Photographic  copies  of  application.  If  it  is  the  practice  of  a  company 
to  attach  to  a  policy  a  photographic  reproduction  of  the  application  upon 
which  it  is  issued,  the  company  niav  attach  to  each  copy  of  a  policy  form 
such  photographic  copy  of  the  application,  filled  out  with  data  appropriate  to 
the  form,  both  Part  I  and  Part  II,  and  reproduced  full  size. 

'■  0.  Purpose  of  form.  A  company  is  requested  to  state,  when  submitting  a 
new  policy  form,  whether  it  is  intended  to  supersede  some  form  theretofore 
aj>proved,  and  if  so,  the  form  number  of  the  form,  to  be  superseded. 

"  Indorsement  Forms. 

"  10.  Indorsement  stamps.  Forms  of  indorsements  for  formal  approval 
should  be  submitted  by  means  of  triplicate  impressions  of  a  rubber  stamp. 
A  typewritten  draft  of  a  proposed  form  of  indorsement  may  be  submitted  for 
examination  preliminary  to  the  preparation  of  the  rubber  stamp.  The  rub- 
ber stamp  should  bear  a  form  number  at  the  lower  left-hand  corner;  it  should 
provide  a  line  for  the  diate  of  execution,  and  it  should  show  that  the  indorse- 
ment is  to  be  executed  in  the  name  of  tlie  company  by  one  or  more  of  its  exec- 
utive officers,  and  their  titles  should  appear  on  tlio  stamp.  The  blanks  in  the 
impressions  of  an  indorsement  stamp  sliould  be  filled  out  in  the  same  manner 
as  policy  forms  and  supplementary  forms. 

"  11.  Blank  indorsement  forms  printed  on  policy.  Certain  indorsement  forms 
that  are  frequentlj^  used  on  life  policies  may  very  well  be  printed  on  the  back 
of  a  policy  form,  ready  to  be  fiiled  in  and  executed  at  any  time  as  occasion 
may  arise.  Such,  for  example,  are  indorsements  for  changing  the  beneficiary; 
changing  the  time  of  premium  payments;  or  changing  mode  of  payment  of 
proceeds  of  policy.  Each  such  blank  indorsement  form  must  be  designated  by 
an  appropriate  form  number,  printed  at  the  loAver  left-hand  corner  of  the  form. 

"  Rider  Forms. 

"  12.  Rider  forms  printed.  Rider  forms,  such,  for  instance,  aS"  those  for  re- 
moving policy  restrictions  as  to  residence,  or  military  or  naval  service,  or  for 
reinstatement  after  lapse,  should  be  printed  and  submitted  in  triplicate,  with 
all  blanks  filled  in  with  hypothetiea]  data  appropriate  to  the  case.  Each  such 
rider  form  must  be  designated  by  a  suitable  form  number,  printedi  at  the  lower 
left-hand  corner  of  the  form;  it  should  provide  a  line  for  the  d^te  of  execu- 
tion, and  it  should  show  that  it  is  to  be  executed  in  the  name  of  the  company 
by  one  or  more  of  its  executive  officers,  and  their  titles  should  be  printed  in 
the  rider.  The  word  '.printed'  in  this  rule  is  used  in  its  ordinary  sense, 
and  it  does  not  includie  work  of  the  mimeograph,  multigraph  or  other  styles 
of  duplicating  machines.'' 

Forms  of  contracts  based  upon  persistence,  or  cessation  of  a  human  life  or 
lives,  must  be  filed  with  and  approved  by  superintendent.  Ruling  Ins.  Dept., 
July  20,  1909. 

Forms  of  life  and  endowment  insurance  and  application  blanks  for  delivery 
after  Jan.  1,  1910,  and  all  advertising  literature  should  conform  to  present  law. 
Ruling  Ins.  Bept.,  Aug.  3.  1909. 


188  The  Insurance  Law.  §  101. 

Policy    forms    and    application    blanks    should    be    submitted    in    triplicate. 
Ruling  Ins'.  Dept.,  Dee.  19,  1912. 

Application   blanks    must  be   completely    filled   out    and   filed   in    triplicate. 
Ruling  Ins.  Dept.,  Aug.  2,  1911. 

•  Photographic  copies  of  application  must  be  reproduced  full  size.     Ruling  Ins. 
Dept.,  Feb.  25,   1913. 

Form  number  must  be  printed   at  lower  left-hand  corner  of  first  page  of 
policy.     Ruling  Ins.  Dept.,  May  25,  1911. 

'Separate  form  number  for  each  policy  form.    Ruling  Ins.  Dept.,  Jan.  2,  1912. 

Place  for  signatures  of  officers  of  policy  form  is  at  foot  of  first  page  or  at 
end  of  policy.     Ruling  Ins.  Dept.,  Oct.  24,  1911. 

Only    indorisement    forms   for   use    with    approved   policy   forms    should   be 
submitted.    Ruling  Insi.  Dept.,  Sept.  25,  1913. 

Approved  endorsement   form  covering  war   conditions.     Ruling  Ins.  Dept., 
April  29,  1914. 

Pure   endowments   are   to  be   considered    as   insurance.    Ruling   Ins.    Dept., 
July  20,  1909. 

Standard    provisions   applicable    to    children's   endowment    policies.      Ruling 
Ins.  Dept.,  Sept.  9,  1911. 

Companies   organized  under   section   70,   subd.    1,  may  attach   to   their  life 
insurance  policy  health  insurance  riders.     Ruling  Ins.  Dept.,  Nov.  3,  1909. 

Shortening  of  limitation  of  claim  period  in  policy  form  disapproved.    Ruling 
Ins.  Dept.,  Nov.   9,  1909. 

Waiver  of  right  to  have  medical  examinations  treated  as  confidential  not 
permissible.     Ruling  Ins.  Dept.,  Aug.  3,  1909. 

Policies  delivered  in  New  York  State  must  not  be  made  subject  to  laws  of 
foreign  states.     Ruling  Ins'.  Dept.,  Aug.  3,  1909. 

Use  of   the   term  "  New  York   State  Official  Policies "  prohibited.     Ruling 
Ins.  Dept.,  Aug.  3,  1909. 

Words  "  renewable-convertible "  may  be  used  in  term  forms.     Ruling  Ins. 
Dept.,  Mardh   31,   1910. 

Words  *"  non-renewable,"  "  non-convertible,"  must  be  used,  when  term  form 
does  not  provide  for  renewal  or  conversion.     Ruling  Insi.  Dept.,  Jan.  15,  1913. 

Privilege  of  renewal  clause   must  state  whether  medical  re-examination  is 
required.     Ruling  Ins.  De,pt.,  March  31,  1910. 

Use  of  word  "  pension  "  in  installment  policy  disapproved.    Ruling  Ins.  Dept., 
April    16,  1913. 

Aggregate  amount  of   installments  and  commuted  value  should  be  stated 
on  face  of  installment  policy.    Ruling  Ins.  Dept.,  Jan.   12,   1914. 

Commuted    value    of    installment    policy    and    aggregate    of    installments 
certain.     Ruling  Ins.  Dept.,  June  12,  1911. 

Installment  option  riders  should  not  be  used   concurrently   with    issue   of 
policy.     Ruling  Ins.  Dept.,  Nov.  23,  1911. 

Waiver  of  premiums  and  disability  provision  may  be  inserted  in  policy  or 
used  as  a  rider.     Ruling  Ins.  Dept.,  Jan.  9,  1912. 

DLsability  clause  may  be  inserted  in  outsitanding  policies  providing  policy 
does  not  prohibit   its  use.     Ruling  Ins.  Dept.,  Feb.   17,   1914. 

Policy  form  with  new  provision  added  must  bear  now  form  number.    Ruling 
Ins.  Dept.,  Fob.  26,   1914. 


§  101.         LiFE^  Health,  Casualty  Corporations.  189 

Clause  maturing  policy  at  face  amount  on  proof  of  total  disability  dis- 
approved.  Ruling  Ins.   Dept.,  April  27,   1914. 

Basis  of  conversion  charge  must  be  stated  in  policy.  Ruling  ins.  Dept.,  Dec. 
3,  lUi3.    . 

Life  policy  may  ibe  assigned  to  one  having  no  insurable  interest  and 
assignee  may  not  be  required  to  furnisih  proof  of  interest.  Ruling  Ins.  Dept., 
July  22,  1914. 

Assignee  should  not  be  required  to  furnish  proof  of  interest;  dili'erent  forms 
of  assignment  should  be  used  depending  on  whether  assignment  is  collateral 
or  absolute.     Ruling  Ins.  Dept.,  Sept.  19,  1914. 

Requirements  as  to  applications  and  beneficiaries  in  group  policies.  Ruling 
Ins.  Dept.,  April  6,   1915. 

Employer  may  not  name  beneficiary  in  group  policy.  Ruling  Ins.  Dept., 
April  21,   1915. 

Proposed  beneficiary  clause  in  group  policy.     Ruling  Ins.  Dept.,  Oct.  9,  1914. 

Incontestability  clause  must  follow  language  of  statute.  Ruling  Ins.  Dept., 
Aug.  7,  1909. 

Provision  making  policy  incontestable  from  date  of  issue  contrary  to  public 
policy.     Ruling  Ins.  Dept.,  Feb.  26,  1910. 

Provision  for  incontestability  after  one  year  approved.  Ruling  Ins.  Dept., 
Dec.  10,  1912. 

Exception  in  incontestable  clause  may  not  be  extended  to  aviation  risks. 
Ruling  Ins.  Dept.,  April  9,  1913. 

Date  of  issue  is  the  date  the  policy  bears  for  original  issues.  Ruling  Ins. 
Dept.,  Nov.   16,  1909. 

Words  "  date  of  issue "  must  appear  in  incontestable  clause.  Ruling  Ins. 
Dept.,  Feb.  9,  1911. 

Railroad  employment  clause  voiding  policy  disapproved.  Ruling  Ins.  Dept., 
Nov.  29,  1913. 

Railroad  employment;  extra  hazards  should  be  covered  by  extra  premium. 
Ruling  Ins.  Dept.,  Dec.  11,  1913. 

Where  application  is  made  part  of  contract,  policy  sihouid  state  that  fact. 
Ruling  Ins.  Dept.,  Aug.  3,  1909. 

Application  not  to  be  printed  in  policy.     Ruling  Ins.  Dept.,  Oct.  24,  1911. 

Where  application  is  made  part  of  contract,  application  blank  must  be 
filled  out  and  submitted  with  policy.    Ruling  Ins.  Dept.,  Jan.  18,  1912. 

Policy  must  contain  specific  provision  for  relief  in  cases  of  misstatement  of 
age.     Ruling  Ins.  Dept.,  Aug.  3,  1909. 

^lisstatement  of  age  provision  in  annuity  contract.  Ruling  Ins.  Dept.,  Sept. 
8,  1909. 

Misstatement  of  age  provision  may  be  omitted  from  industrial  policies. 
Ruling  Ins.  Dept.,  April  25,  1912. 

Waiver  of  lapse  or  forfeiture  provisions  in  application  not  permissible. 
Ruling  Ins.  Dept.,  Aug.  7,  1909. 

Cancellation  clause  in  "  Avif  e  insurance  "  policy  disapproved.  Ruling  Ins. 
Dept.,  Feb.  1,   1910. 

Basis  of  values  should  be  stated  in  policy.    Ruling  Ins.  Dept.,  April  7,  1913. 

Dividends  may  bo  applied  to  payment  of  premiums.  Ruling  Ins.  Dept., 
Sept.  19,  1912. 

Policy  loan  provision  should  state  a  definite  rate  of  interest.  Ruling  Ins. 
Dept.,  Aug.  7,  1909. 


190  The  Insurance  Law.  §  10L>. 

Words  "  at  any  time  "  should  not  be  omitted  from  loan  provision.  Ruling 
Ins.  Dept.,  Feb.  29,  1912. 

Promissory  note  must  not  be  taken  as  additional  security  for  a  policy  loan. 
Ruling  Ins.  Dept.,  Jan.  4,  1912. 

Headings  for  first  column  of  table  of  values  in  life  policies  are  lawful, 
footnote,  when  necessary.     Ruling  Ins.  Dept.,  Nov.  5,  1909. 

Loan  values  in  single  premium  policies  m.ust  begin  first  year.  Ruling  Ins. 
Dept.,  Sept.  11,  1912. 

When  no  surrender  charge  is  made,  tabular  value  should  be  carried  to  cents, 
and  extended  term  to  diays.     Ruling  Ins.  Dept.,  Dec.  19,  1913. 

Policy  should  contain  reinstatement  provision.  Ruling  Ins.  Dept.,  Aug.  3, 
1909. 

Policy  may  state  that  rate  of  interest  on  premiums  in  default  shall  not 
exceed  six  per  centum  per  annum.     Ruling  Insi.  Dept.,  Nov.  9,  1909. 

§  102.  Companies  issuing  participating  policies  not  to  do  a 
nonparticipating  business. 

]^o  domestic  mutual  life  insurance  corporation  and  no  do- 
mestic stock  life  insurance  corporation  hereaftx^r  issning  or  pro- 
fessing to  issue  any  participating  policies,  shall  issue  any  policies, 
except  annuities,  which  do  not  by  their  tenns  give  to  the  holders 
thereof  full  right  to  participate  in  the  accumulations  of  said  cor- 
poration as  provided  in  this  chapter.  This  section  shall  not  apply 
to  paid-up  or  temporary  and  pure  endo^vment  insurance  issued 
or  granted  in  exchange  for  lapsed  or  surrendered  policies,  nor  to 
policies  of  reinsurance. 

Source.— Former  §  102,  as  added  by  L.  1<)06,  chap.  326. 

Amended  by  L.  1911,  chap.  369 

A  company  can  do  a  participating  and  non-participating  business  up  to 
January  1,  1907,  and  thereafter  can  only  do  one  form;  the  company,  how- 
ever, may  change  from  one  class  of  business  to  another.  Attorney-General 
Rep.,  1906,  page  539. 

Foreign  life  insurance  corporations  heretofore  licensed  may  hereafter  be 
licensed  if  they  do  both  a  participating  and  non-participating  business. 
Attorney-General  Rep.,  1906,  page  549. 

Under  section  102  of  the  Insurance  Law,  "  foreign  life  insurance  corporations 
heretofore  licensed  may  hereafter  be  licensed  if  they  do  both  a  participating 
and  non-participating  businees."    Ruling  Ins.  Dep.,  May  4,  1908. 

A  domestic  stock  life  insurance  company  can  change  from  a  non-participat- 
ing to  a  participating  business,  but  at  any  particular  time  must  Ix^  one  or  the 
other.     Ruling  Attorney-General,  June  20,  1906. 

Foreign  life  insurance  corporations  of  other  states,  heretofore  licensed,  need 
not  comply  with  the  provisions  of  this  section.  Ruling  Ins.  Dept.,  January 
22,  1908. 


§  103.         LiFE^  Health^  Casualty  Corporations.  191 

There  sTiould  be  no  distinction  in  the  application  of  this  law  between  a 
mutual  life  insurance  company  doing  participating  business  exclusively  and 
a  stock  company  doing  a  non-participating  business  exclusively.  Opinion  of 
Attorney-General,  January  27,  1908. 

A  life  insurance  company  which  issued  non-participating  policies  up  to 
August  11,  1908,  at  which  time  it  elected  to  do  only  a  participating  businesa 
and  -(ince  that  time  has  issued  only  participating  policies,  cannot  change  from 
a  participating  to  a  non-participating  business.  Attorney-General's  Dec,  Sept. 
24,  1909. 

A  stock  life  insurance  corporation  of  another  State,  transacting  its  business 
exclusively  upon  a  non-mutual  basis  may  be  licensed  to  do  business  in  this 
State,  and  thereafter  shall  issue  only  non- participating  policies.  Ruling  Ins. 
Dept.,  Feb.  1,  1911. 

Non-participating  company  after  January  1,  1907,  may  not  use  participating 
forms.     Ruling  Ins.  Dept.,  Nov.  20,  1906. 

Old  lapsed  participating  policy  may  be  reinstated  after  January  1,  1907. 
Ruling  Ins  Dept.,   Dec.   13,   1906. 

Companies  may  issue  paid-up  non-participating  .policies  on  deferred 
dividend  forms  issued  prior  to  January  1,  1907.  Ruling  Ins.  Dept.,  Feb.  19, 
1907. 

Old  participating  policy  may  bo  changed  for  another  form  of  participating 
policy.     Ruling  Ins.  Dept.,  Dec.  13,  1906. 

Term  "  annuities  "  includes  survivorship  annuities.  Ruling  Ins.  Dept.,  Dec. 
20,  1Q06. 

Company  may  make  non-participating  dividend  additions  to  policies  issued 
prior  to  1907.     Ruling  Ins.  Dept.,  March  12,  1907. 

The  word  "  issued "  as  used  in  sections  83  and  102  are  synonymous  with 
the  word  "  written  "  as  used  in  section  103.     Ruling  Ins.  Dept.,  Jan.  8,  1907. 

§  103.    Annual  reports  of  life  insurance  corporations. 

In  addition  to  any  other  matter  whicli  may  be  required  by  law 
or  pursuant  to  law  by  the  superintendent  of  insurance  to  be  stated 
therein  every  annual  report  of  every  life  insurance  corporation 
doing  business  in  the  state  of  New  York,  made  pursuant  to  sec- 
tion forty-four  of  this  chapter,  shall  contain  an  accurate,  concise 
and  complete  statement  of  the  following  matters,  to  wit:  (1) 
All  the  real  property  held  by  the  corporation-,  the  dates  of  acqui- 
sition, the  names  of  the  vendors,  the  actual  cost,  the  value  at 
which  it  is  carried  on  the  company's  books,  the  market  value,  the 
amounts  expended  during  the  year  for  repairs  and  improvements, 
the  gross  and  net  income  from  each  parcel,  and  if  any  portion 
thereof  be  occupied  by  the  company  the  rental  value  thereof,  a 
statement  of  any  certificate  issued  by  the  superintendent  extending 
the  time  for  the  disposition  thereof,  and  all  purchases  and  sales 


192  The  Insurance  Law.  §  103. 

made  since  the  last  annual  statement,  witli  particulars  as  to  dates, 
names  of  vendors  and  vendees,  and  the  consideration.  (2)  The 
amount  of  existing  loans  upon  the  security  of  real  property,  stat- 
ing the  amount  loaned  upon  property  in  each  state  and  foreign 
country.  (3)  The  moneys  loaned  by  the  corporation  to  any  per- 
son other  than  loans  upon  the  security  of  real  property  above  men- 
tioned and  other  than  loans  upon  policies  the  actual  borrowers 
thereof,  the  maturity  and  rate  of  interest  of  such  loans,  the 
securities  held  therefor,  and  all  substitutions  of  securities  in  con- 
nection therewith,  and  the  same  particulars  with  reference  to  any 
loans  made  or  discharged  since  the  last  annual  statement.  (4) 
All  other  property  owned  by  the  company  or  in  which  it  has  any 
interest  including  all  securities,  whether  or  not  recognized  by 
the  law  as  proper  investments,  the  dates  of  acquisition,  from 
whom  acquired,  the  actual  cost,  the  value  at  which  the  property 
is  carried  upon  the  books,  the  market  value,  the  interest  or  divi- 
dends received  thereon,  during  the  year ;  also  all  purchases  and 
sales  of  property  other  than  real  estate  made  since  the  last  annual 
statement,  with  particulars  as  to  dates,  names  of  purchasers  and 
sellers,  and  the  consideration;  and  also  the  income  received  and 
outlays  made  in  connection  with  all  such  property.  (5)  All 
commissions  paid  to  any  persons  in  connection  with  loans  or  pur- 
chases or  sales  of  any  property,  and  a  statement  of  all  payments 
for  legal  expenses,  giving  particulars  as  to  dates,  amounts  and 
names  and  addresses  of  payees.  (6)  All  moneys  expended  in  con- 
nection with  any  matter  pending  before  any  legislative  body  or 
any  officer  or  department  of  government,  giving  particulars  as  to 
dates,  amounts,  names  and  addresses  of  payees,  the  measure  or  pro- 
ceeding in  connection  with  which  the  payment  was  made,  and  the 
interest  of  the  corporation  therein.  (7)  The  names  of  the  officers 
and  directors  of  the  company,  the  proceedings  at  the  last  annual 
election,  giving  the  names  of  candidates  and  the  number  of 
votes  cast  for  each  and  whether  in  person,  by  proxy  or  by  mail. 
(8)  The  salary,  compensation  and  emoluments  received  by  officers 
or  directors  and  where  the  same  amounts  to  more  tlian  five  thou- 
sand dollars  that  received  by  any  person,  firm  or  corporation,  with 
particulars  as  to  dates,  amounts,  payees  and  the  autliority  by 
which  the  payment  was  made;  also  all  salaries  paid  to  any  repre- 


§  103.         LiFE^  Health^  Casualty  Corporations.  193 

sentative  either  at  the  home  office,  or  at  any  branch  office,  or  agency, 
for  agency  supervision.  (9)  The  largest  balances  carried  in 
each  bank  or  trust  company  during  each  month  of  the  year.  (10) 
All  death  claims  resisted  or  compromised  during  the  year,  with 
particulars  as  to  sums  insured,  sums  paid  and  reasons  assigned 
for  resisting  or  compromising  the  same  in  each  case.  (11)  A 
complete  statement  of  tlie  profits  and  losses  upon  the  business 
transacted  during  the  year  and  the  sources  of  such  gains  and 
losses,  and  a  statement  showing  separately  the  margins  upon 
premiums  for  the  first  year  of  insurance  ascertained  according 
to  the  select  and  ultimate  method  of  valuation  as  provided  in 
section  eighty-four  of  tliis  chapter  and  the  actual  expenses  charge- 
able to  the  procurement  of  new  business  incurred  since  the  last 
annual  statement,  as  enumerated  in  section  ninety-seven  of  this 
article.  A  foreign  corporation,  issuing  both  participating  and 
nonparticipating  policies,  shall  make  a  separate  statement  of 
profits  and  losses,  margins  and  expenses,  as  aforesaid,  with  reier- 
ence  to  each  of  said  kinds  of  business,  and  also  showing  the  manner 
in  which  any  general  outlays  of  the  company  have  been  appor- 
tioned to  each  of  such  kinds  of  business.  (12)  A  statement 
separately  showing  the  amount  of  the  gains  of  the  company  foi 
the  year  attributable  to  policies  written  after  December  thirty-first^ 
nineteen  hundred  and  six,  and  the  precise  method  by  which  the  cal- 
culation has  been  made.  (13)  The  rates  of  annual  dividends  de 
Glared  during  the  year  for  all  plans  of  insurance  and  all  durations 
and  for  ages  at  entry,  twenty-five,  thirty-five,  forty-five  and  fifty- 
five,  and  the  precise  method  by  which  such  dividends  have  been  cal- 
culated. (14)  A  statement  showing  the  rates  of  dividends  declared 
upon  deferred  dividend  policies  completing  their  dividend  periods 
for  all  plans  of  insurance  and  the  precise  methods  by  which  said 
dividends  have  been  calculated.  (15)  A  statement  showing  any 
and  all  amounts  set  apart  or  provisionally  ascertained  or  calcu- 
lated or  held  awaiting  apportionment  upon  golicies  with  deferred 
dividend  periods  longer  than  one  year  for  all  plans  of  insurance 
and  all  durations  and  for  ages  of  entry  as  aforesaid,  together  with 
the  precise  statements  of  the  methods  of  calculation  by  which  the 
same  have  been  provisionally  or  otherwise  determined.  (16)  A 
statement  of  any  and  all  reserve  or  surplus  funds  held  by  the  com- 


194  The  Insueance  Law.  §  104. 

pany  and  for  what  purpose  tbey  are  claimed  respectively  to  be 
held. 

(17.)  A  statement  showing  all  sums  of  money  expended  in,  or 
in  any  way  connected  with,  the  election  of  directors  or  trustees, 
with  a  statement  when  expended,  by  whom  expended,  to  whom 
paid  and  for  what  purpose. 

Source.— Former  §  103,  as  added  by  L.  1906,  chap.  326,  subd.  17,  and 
amended  by  L.  1907,  chap.  623. 

Under  section  103  the  provisions  concerning  the  annual  report  of  an  insur- 
ance company  may  not  be  disregarded,  and  this  section  is  a  direct  instruction 
that  every  annual  statement  under  this  provision  shall  be  complete  in  itself  and 
without  reference  to  details  contained  in  any  prior  annual  statement.  Ruling 
Ins.  Dept.,  September  23,  1908. 

The  Superintendent  of  Insurance  has  not  made  and  does  not  contemplate 
making  a  rule  on  the  subject  of  division  of  expenses  under  subdivision  12  of 
this  section,  it  being  assumed  that  the  insurance  companies  will  comply  with 
the  statute.    Ruling  Ins.  Dep.,  February  10,  1908. 

Accounts  should  be  so  kept  as  to  separate  repair  and  improvement  items 
from  the  other  expenses  on  real  estate.     Ruling  Ins.  Dept.,  Dec.  06,  1906. 

Real  estate  bid  in  by  an  insurance  company  on  mortgage  foreclosure  insti- 
tuted by  it  constitutes  a  purchase  of  real  estate,  which  should  appear  in  the 
annual  report.     Ruling  Ins.  Dept.,  Jan.  14,  1907. 

All  mortgages  acquired  or  disposed  of  during  the  year  must  be  included  in 
the  annual  report.     Ruling  Ins.  Dept.,  Jan.  23,   1907. 

All  payments  over  $5,000,  including  payments  made  to  agents  in  the 
nature  of  a  commission,  must  be  returned'  in  Schedule  O.  Ruling  Ins.  Dept., 
Jan.  29,  1907. 

A  company  must  make  return  of  all  salaries  paid  any  representative  either 
at  home  or  at  a  branch  office  or  agency  of  the  company  for  agency  super- 
vision.    Ruling  Ins.  Dept.,  Dec.  13,  1906. 

Separate  statement  is  required!  in  reporting  participating  and  non- 
participating  business.     Attorney-General  Rep.,  iSept.  7,  1906. 

A  separate  statement  of  profit  and  loss  of  participating  and  non-participat- 
ing parties  must  be  made  by  foreign  corporations.  Ruling  Ins.  Dept.,  Sept. 
28,  1906. 

Separate  statement  of  profit  and  loss  exhibit  on  participating  and  non- 
participating  policies  not  necessary  when  a  foreign  company  has  discontinued 
use  of  one  form.     Ruling  Ins.  Dept.,  Jan.  8,  1907. 

§  104.  Transfer  of  deposits  by  superintendent  of  insurance 
to  receiver. 

Tn  every  case  where  life  insurance  or  annuity  companies,  or 
any  corporation  of  either  of  the  classes  provided  for  by  this  article 
and  article  five  of  this  chapter,  whether  formed  under  said  articles 
or  prior  thereto,  has  been  or  hereafter  may  be  dissolved,  and  a  re- 


§  104.         LiFE^  Health^  Casualty  Corpoeations.  195 

ceiver  thereof  appointed,  upon  the  application  of  the  attorney- 
general,  or  by  action  begun  in  the  name  of  the  people  of 
the  state  of  New  York,  each  and  every  security  and  fund  which 
shall  have  been  deposited  by  such  company  prior  to  its  dissolu- 
tion, with  the  superintendent  of  the  insurance  department,  for 
the  security  and  protection  of  its  policyholders  or  any  class  of 
such  policyholders,  under  the  statutes  in  such  oases  made  and 
provided,  may,  by  an  order  of  the  supreme  court,  made  at  a 
special  term  thereof  held  within  the  judicial  district  in  which 
the  principal  office  of  such  company  was  located,  prior  to  its  dis- 
solution, upon  the  application  of  the  attorney-general,  after  service 
of  eight  days'  written  notice  of  such  application  upon  the  super- 
intendent of  the  insurance  department,  be  transferred  from  the 
said  superintendent  of  the  insurance  department  to  the  receiver 
of  such  company;  and  thereupon  the  said  superintendent  shall 
deliver  such  funds  and  securities  to  such  receiver,  and  in  him 
the  title  thereto  shall  immediately  vest.  Such  receiver  shall 
thereupon  convert  such  securities  and  funds  into  money,  and 
ishall  distribute  the  proceeds  thereof,  and  of  each  and  every 
class  of  such  funds  or  securities  among  the  respective  holders 
of  valid  policies  of  such  company  for  whose  benefit  and  security 
the  deposit  or  deposits  were  originally  made  proportionately  to  tlie 
respective  valuation  of  such  policies,  as  shall  be  ascertained  in 
proceedings  taken  by  such  receiver  for  the  valuation  of  policies, 
and  the  determination  of  the  liabilities  of  such  company  under 
the  statutes  in  such  cases  made  and  provided,  and  the  course  and 
practice  of  the  supreme  court  in  cases  of  insolvent  corj)orations, 
until  such  valuation  shall  have  been  paid  in  full.  If  any  portion 
of  such  proceeds  shall  then  remain,  such  balance  may,  under  an 
order  of  the  supreme  court  in  such  behalf  duly  made  at  special 
term,  be  made  a  part  of  the  general  assets  of  such  receivership, 
and  thereupon  be  distributed  by  said  receiver  in  payment  of  or 
upon  the  general  liabilities  of  such  dissolved  company  according 
to  law.  And  in  case  of  a  corporation  formed  under  the  laws  of 
any  other  state,  doing  insurance  business  in  this  state  of  the  nature 
of  that  done  by  the  corporations  above  mentioned,  in  case  of  any 
action  or  proceeding  brought  or  hereafter  to  be  brought  in  this 
state  by  the  attorney-general,  or  in  the  name  of  the  people  of  the 


196  TriE  Insurance  Law.  §§   105,  106. 

state  of  ITew  York,  for  the  winding  up  of  its  business  in  this  state, 
or  for  or  involving  distribution  of  its  assets  therein,  the  same  pro- 
ceedings may  be  had  with  reference  to  any  securities  and  funds 
deposited  by  such  corporation  with  the  superintendent  of  the  in- 
surance department  of  this  state  under  the  statutes  in  such  case 
made  and  provided,  as  are  hereinbefore  provided  with  reference  to 
deposits  of  corporations  of  this  state,  save  only  that  the  order  for 
transfer  of  the  deposit  may  be  made  in  the  judicial  district  in 
which  the  principal  offi(;e  of  the  corporation  in  this  state  was 
located  at  the  commencement  of  the  action  or  proceedings,  or  in 
the  third  judicial  district. 
Source.—  L.  1884,  chap.  285,  §  2,  as  amended  by  L.  1902,  chap.  162,  §  1. 

§  105.    Powers  of  certain  existing  corporations  increased. 

Every  health  or  casualy  company,  existing  on  May  thirty-first, 
eighteen  hundred  and  eighty-nine,  formed  under  the  provisions  of 
the  second  department  of  section  one  of  chapter  four  hundred 
and  sixty-three  of  the  laws  of  eighteen  hundred  and  fifty-three, 
shall  possess  the  same  powers  as  though  it  were  formed  pursuant 
to  said  act  as  amended  by  chapter  three  hundred  and  thirty-eight  of 
the  laws  of  eighteen  hundred  and  eighty-nine. 

Source.—  L.  1889,  chap.  338,  §  2. 

Section  2  of  Laws  1889,  chapter  338,  was  not  repealed  by  the  repealing  sec- 
tion of  the  former  Insurance  Law  (L.  1892,  chap.  690,  §  290),  but  was  spe- 
cially excepted  from  repeal.  The  section  conferred  upon  insurance  companies 
additional  powers.  It  was  consolidated  and  made  a  part  of  Article  3  of  the 
present  Insurance  Law  relating  to  life,  health  and  casualty  insurance 
corporations. 

§  106.    Boards  of  directors  to  be  divided  into  classes. 

Boards  of  directors  of  every  domestic  mutual  life  insurance  cor- 
poration, elected  under  and  pursuant  to  the  provisions  of  laws  of 
nineteen  hundred  and  six,  chapter  one  hundred  and  twenty-three, 
as  amended  by  laws  of  nineteen  hundred  and  six,  chapter  three 
hundred  and  fifty-four,  shall  divide  themselves  by  lot  into  two 
classes  as  nearly  equal  as  may  be,  one  class  to  hold  oflSce  until 
the  annual  meeting  of  the  company  to  be  held  in  accordance  with 
its  charter  or  by-laws  in  the  year  nineteen  hundred  and  eight, 
and  the  other  class  to  hold  office  until  the  annual  meeting  to  be  so 


§  107.  LiFE^  Health^  Casualty  Coepoeations.  197 

held  in  the  year  nineteen  hundred  and  nine.  There  shall  be  no 
election  of  directors  at  the  annual  meeting  in  nineteen  hundred 
and  seven.  In  case  of  the  death  or  resignation  of  any  director 
elected  in  nineteen  hundred  and  six  his  successor  shall  be  chosen 
by  the  board  of  directors  to  hold  office  only  until  the  next  election 
of  directors.  At  the  annual  meeting  in  nineteen  hundred  and 
eight  directors  shall  be  elected  for  a  term  of  one  year  in  the  place 
of  those  whose  terms  of  office  then  expire.  At  the  annual  meeting 
to  be  held  in  nineteen  hundred  and  nine,  and  biennially  thereafter, 
an  entire  new  board  of  directors  shall  be  elected  for  the  term  of 
two  years.  The  election  of  directors  of  every  domestic  mutual 
life  insurance  corporation,  whether  incorporated  by  a  special  act 
or  under  a  general  law,  which  according  to  its  charter  or  by-laws 
would  be  held  prior  to  the  month  of  April,  nineteen  hundred  and 
eight,  shall  be  postponed  and  held  on  the  day  in  that  month  cor- 
responding to  the  day  of  the  month  when  it  would  otherwise  occur ; 
and  the  directors  of  said  corporations  whose  terms  would  other- 
wise earlier  expire  shall  continue  to  hold  office  until  such  time 
and  until  their  successors  are  elected. 
Source.— L.  1906,  chap.  123,  §  3,  as  amended  by  L.  1907,  chap.  625,  §  1. 

Laws  1906,  chapter  123,  as  amended  by  Laws  1906,  chapter  354,  provided  for 
the  election  of  new  boards  of  directors  of  mutual  life  insurance  companies  on 
December  18,  1906.  As  the  object  of  the  act  has  been  attained  and  the  time 
limited  in  the  first  two  sections  has  expired,  those  sections  were  eliminated 
and  are  repealed  as  obsolete,  but  section  3,  which  provides  for  a  continuance 
in  office  of  the  directors  elected  under  said  act  until  1908  and  1909,  respectively, 
is  consolidated  in  this  section. 

§  107.  Standard  provisions  for  accident  and  health  policies. 

Subdivision  (a).  On  and  after  the  first  day  of  January,  nine- 
teen hundred  and  fourteen,  no  policy  of  insurance  against  loss  or 
damage  from  the  sickness,  or  the  bodily  injury  or  death  of  the 
insured  by  accident  shall  be  issued  or  delivered  to  any  person 
in  this  state  by  any  corporation  organized  under  article  two  of 
this  chapter,  or,  if  a  foreign  corporation,  authorized  to  do  busi- 
ness in  this  state,  until  a  copy  of  the  form  thereof  and  of  the 
classification  of  risks  and  the  premium  rates  pertaining  thereto 
have  been  filed  with  the  superintendent  of  insurance;  nor  shall 
it  be  so  issued  or  delivered  until  the  expiration  of  thirty  days 
after  it  has  been  so  filed  unless  the  said   superintendent  shall 


198  The  Insueance  Law.  §  107. 

sooner  give  his  written  approval  thereto.  If  the  said  superin- 
tendent shall  notify,  in  writing,  the  company,  corporation, 
association,  society  or  other  insurer  which  has  filed  such  form 
that  it  does  not  comply  with  the  requirements  of  law,  speci- 
fying the  reasons  for  his  opinion,  it  shall  be  unlawful  thereafter 
for  any  such  insurer  to  issue  any  policy  in  such  form.  The 
action  of  the  said  superintendent  in  this  regard  shall  be  subject 
to  review  by  any  court  of  competent  jurisdiction,  provided,  how- 
ever, that  nothing  in  this  section  shall  be  so  construed  as  to  give 
jurisdiction  to  any  court  not  already  having  jurisdiction. 

Subd.  (b).  ]^o  such  policy  shall  be  so  issued  or  delivered 
(1)  unless  the  entire  money  and  other  considerations  therefor 
are  expressed  in  the  policy;  nor  (2)  unless  the  time  at  which 
the  insurance  thereunder  takes  effect  and  terminates  is  stated  in 
a  portion  of  the  policy  preceding  its  execution  by  the  insurer; 
nor  (3)  if  the  policy  purports  to  insure  more  than  one  person; 
nor  (4)  unless  every  printed  portion  thereof  and  of  any  endorse- 
ments or  attached  papers  shall  be  plainly  printed  in  type  of 
which  the  face  shall  be  not  smaller  than  ten  point;  nor  (5)  unless 
a  brief  description  thereof  be  printed  on  its.  first  page  and  on  its 
filing  back  in  type  of  which  the  face  shall  be  not  smaller  than 
fourteen  point;  nor  (6)  unless  the  exceptions  of  the  policy  be 
printed  with  the  same  prominence  as  the  benefits  to  which  they 
apply,  provided,  however,  that  any  portion  of  such  policy  which 
purports,  by  reason  of  the  circumstances  under  which  a  loss  is 
incurred,  to  reduce  any  indemnity  promised  therein  to  an  amount 
less  than  that  provided  for  the  same  loss  occurring  under  ordinary 
circumstances,  shall  be  printed  in  bold  face  type  and  with  greater 
prominence  than  any  other  portion  of  the  text  of  the  policy. 

Subd.  (c).  Every  such  policy  so  issued  shall  contain  certain 
standard  provisions,  which  shall  bo  in  the  words  and  in  the  order 
hereinafter  set  forth  and  be  preceded  in  every  policy  by  the 
caption,  "  Standard  Provisions."  In  each  such  standard  pro- 
vision wherever  the  word  "  insurer  "  is  used,  there  shall  be  sub- 
stituted therefor  "  company  '*  or  "  corporation  "  or  "  association  '' 
or  "  society  "  or  such  other  word  as  will  properly  designate  the 
insurer.     Said  standard  provisions  shall  be: 


§  107.         LiFE^  Heai.tii^  Casualty  Cokpokations.  199 

(1)  A  standard  provision  relative  to  the  contract  which  may 
he  in  either  of  the  following  two  forms:  Form  (A)  to  he  used  in 
policies  which  do  not  provide  for  reduction  of  indemnity  on 
account  of  change  of  occupation,  and  Form  (B)  to  he  used  in 
policies  which  do  so  provide.  If  Form  (B)  is  used  and  the 
policy  provides  indemnity  against  loss  from  sichness,  the  words 
"  or  contracts  sickness  "  may  he  inserted  therein  immediately  after 
the  words  "  in  the  event  that  the  insured  is  injured  '' : 

(A) :  1.  This  policy  includes  the  endorsements  and  attached 
papers,  if  any,  and  contains  the  entire  contract  of  insurance. 
No  reduction  shall  be  made  in  any  indemnity  herein  provided 
by  reason  of  change  in  the  occupation  of  the  insured  or  by  reason 
of  his  doing  any  act  or  thing  pertaining  to  any  other  occupation. 

(B)  :  1.  This  policy  includes  the  endorsements  and  attached 
papers,  if  any,  and  contains  the  entire  contract  of  insurance 
except  as  it  may  be  modified  by  the  insurer's  classification  of 
risks  and  premium  rates  in  the  event  that  the  insured  is  injured 
after  having  changed  his  occupation  to  one  classified  by  the  in- 
surer as  more  hazardous  than  that  stated  in  the  policy,  or  while 
he  is  doing  any  act  or  thing  pertaining  to  any  occupation  so 
classified,  except  ordinary  duties  about  his  residence  or  while 
engaged  in  recreation,  in  which  event  the  insurer  will  pay  only 
such  portion  of  the  indemnities  provided  in  the  policy  as  the  pre- 
mium paid  would  have  purchased  at  the  rate  but  within  the 
limits  so  fixed  by  the  insurer  for  such  more  hazardous  occupation. 

If  the  law  of  the  state  in  which  the  insured  resides  at  the  time 
this  policy  is  issued  requires  that  prior  to  its  issue  a  statement  of 
the  premium  rates  and  classification  of  risks  pertaining  to  it  shall 
be  filed  with  the  state  official  having  supervision  of  insurance  in 
such  state,  then  the  premium  rates  and  classification  of  risks  men- 
tioned in  this  policy  shall  mean  only  such  as  have  been  last  filed 
by  the  insurer  in  accordance  with  such  law,  but  if  such  filing  is 
not  required  by  such  law  then  they  shall  mean  the  insurer's 
premium  rates  and  classification  of  risks  last  made  effective  by 
it  in  such  state  prior  to  the  occurrence  of  the  loss  for  which  the 
insurer  is  liable. 


200  The  Insurance  Law.  §  107. 

(2)  A  standard  provision  relative  to  changes  in  the  contract, 
which  shall  be  in  the  following  form: 

2.  1^0  statement  made  by  the  applicant  for  insurance  not  in- 
cluded herein  shall  avoid  the  policy  or  be  used  in  any  legal  pro- 
ceeding hereunder.  "No  agent  has  authority  to  change  this  policy 
or  to  waive  any  of  its  provisions,  l^o  change  in  this  policy  shall 
be  valid  unless  approved  by  an  executive  officer  of  the  insurer 
and  such  approval  be  endorsed  hereon. 

(3)  A  standard  provision  relative  to  reinstatement  of  policy 
after  lapse  which  may  he  in  either  of  the  three  following  forms: 
Form  (A)  to  he  used  in  policies  which  insure  only  against  loss 
from  accident;  Form  (B)  to  he  used  in  policies  which  insure  only 
against  loss  from  sichness;  and  Form  (C)  to  he  used  in  policies 
which  insure  against  loss  from  hoth  accident  and  sichness, 

(A)  :  3.  If  default  be  made  in  the  payment  of  the  agreed  pre- 
mium for  this  policy,  the  subsequent  acceptance  of  a  premium  by 
the  insurer  or  by  any  of  its  duly  authorized  agents  shall  reinstate 
the  policy,  but  only  to  cover  loss  resulting  from  accidental  injury 
thereafter  sustained. 

(B)  :  3.  If  default  be  made  in  the  payment  of  the  agreed  pre- 
mium for  this  policy,  the  subsequent  acceptance  of  a  premium  by 
the  insurer  or  by  any  of  its  duly  authorized  agents  shall  reinstate 
the  policy  but  only  to  cover  such  sickness  as  may  begin  more  than 
ten  days  after  the  date  of  such  acceptance. 

(C)  :  3.  If  default  be  made  in  the  payment  of  the  agreed  pre- 
mium for  this  policy,  the  subsequent  acceptance  of  a  premium  by 
the  insurer  or  by  any  of  its  duly  authorized  agents  shall  reinstate 
the  policy  but  only  to  cover  accidental  injury  thereafter  sustained 
and  such  sickness  as  may  begin  more  than  ten  days  after  the  date 
of  such  acceptance. 

(4)  A  standard  provision  relative  to  time  of  notice  of  claim 
which  may  he  in  either  of  the  three  following  forms:  Form  {A) 
to  he  used  in  policies  which  insure  only  against  loss  from  accident; 
Form  (B)  to  he  used  in  policies  which  insure  only  against  loss 
from  sichness,  and  Form  (C)  to  he  used  in  policies  which  insure 


§   lOT.  Life,  IlKAi/rii,  (\\slalty  'Cokpohations.  201 

against  loss  from  both  accident  and  sicJcness.  If  Form  (A)  or 
Form  (C)  is  used  the  insurer  may  at  its  option  add  thereto  the  fol- 
lowing sentence,  "  In  event  of  accidental  death  immediate  notice 
thereof  must  he  given  to  the  insurer/' 

(A)  :  4.  Written  notice  of  injury  on  which  claim  may  be  based 
must  be  given  to  the  insurer  within  twenty  days  after  the  date  of 
the  accident  causing  such  injury. 

(B)  :  4.  Written  notice  of  sickness  on  which  claim  may  be 
based  must  be  given  to  the  insurer  within  ten  days  after  the  con- 
mencement  of  the  disability  from  such  sickness. 

(C)  :  4.  Written  notice  of  injury  or  of  sickness  on  which  claim 
may  be  based  must  be  given  to  the  insurer  within  twenty  days  after 
the  date  of  the  accident  causing  such  injury  or  within  ten  days 
after  the  commencement  of  disability  from  such  sickness. 

(5)  A  standard  provision  relative  to  sufficiency  of  notice  of 
claim  which  shall  he  in  the  following  form  and  in  which  the  in- 
surer shall  insert  in  the  blank  space  such  office  and  its  locajtion  as 
it  ma^y  desire  to  designate  for  such  purpose  of  notice : 

5.  Such  notice  given  by  or  in  behalf  of  the  insured  or  bene- 
ficiary, as  the  case  may  be,  to  the  insurer  at 

or  to  any  authorized  agent  of  the  insurer,  with  particulars  suffi- 
cient to  identify  the  insured,  shall  be  deemed  to  be  notice  to  the 
insurer.  Failure  to  give  notice  within  the  time  provided  in  this 
policy  shall  not  invalidate  any  claim  if  it  shall  be  shown  not  to 
have  been  reasonably  possible  to  give  such  notice  and  that  notice 
was  given  as  soon  as  was  reasonably  possible. 

(6)  A  standard  provision  relative  to  furnishing  forms  for  the 
convenience  of  the  insured  in  submitting  proof  of  loss  as  follows: 

6.  The  insurer  upon  receipt  of  such  notice,  will  furnish  to  the 
claimant  such  forms  as  are  usually  furnished  by  it  for  filing  proofs 
of  loss.  If  such  forms  are  not  so  furnished  within  fifteen  days 
after  the  receipt  of  such  notice,  the  claimant  shall  be  deemed  to 
have  complied  with  the  requirements  of  this  policy  as  to  proof  of 


202  The  Insurance  Law.  §  107. 

loss  upon  submitting  within  the  time  fixed  in  the  policy  for  filing 
proofs  of  loss,  written  proof  covering  the  occurrence,  character  and 
extent  of  the  loss  for  which  claim  is  made. 

(7)  A  standard  provision  relative  to  filing  proof  of  loss  which 
shall  he  in  such  one  of  the  following  forms  as  may  be  appropriate 
to  the  indemnities  provided: 

(A)  :  7.  Affirmative  proof  of  loss  must  be  furnished  to  the  in- 
surer at  its  said  office  within  ninety  days  after  the  date  of  the  loss 
for  which  claim  is  made. 

(B)  :  7.  Affirmative  proof  of  loss  must  be  furnished  to  the  in- 
surer at  its  said  office  within  ninety  days  after  the  termination  of 
the  period  of  disability  for  which  the  company  is  liable. 

(C)  :  7.  Affirmative  proof  of  loss  must  be  furnished  to  the  in- 
surer at  its  said  office  in  case  of  claim  for  loss  of  time  from  dis- 
ability within  ninety  days  after  the  termination  of  the  period  for 
which  the  insurer  is  liable,  and  in  case  of  claim  for  any  other  loss, 
within  ninety  days  after  the  date  of  such  loss. 

(8)  A  standard  provision  relative  to  examination  of  the  person 
of  the  insured  and  relative  to  autopsy  which  shall  he  in  the  fol- 
lowing form: 

8.  The  insurer  shall  have  the  right  and  opportunity  to  ex- 
amine the  person  of  the  insured  when  and  so  often  as  it  may  rea- 
sonably require  during  the  pendency  of  claim  hereunder,  and  also 
the  right  and  opportunity  to  make  an  autopsy  in  case  of  death 
where  it  is  not  forbidden  by  law. 

(9)  A  standard  provision  relative  to  the  time  within  which 
payments  other  than  those  for  loss  of  time  on  account  of  disability 
shall  be  made,  which  provision  may  he  in  either  of  the  following 
two  forms  and  which  may  be  omitted  from  any  policy  providing 
only  indemnity  for  loss  of  time  on  account  of  disability.  The  in- 
surer shall  insert  in  the  blank  space  either  the  word  ''  immedi- 
ately "  or  appropriate  language  to  designate  such  period  of  time, 
not  more  than  sixty  days,  as  it  may  desire;  Form  (A)  to  be  used 
in  policies  which  do  not  provide  indemnity  for  loss  of  time  on  ac- 


§  I'OT.         Life,  Health,  CasUxVlty  Corpokations.  2'0'3 

count  of  disability  and  Form  (B)  to  he  used  in  policies  which  do 
so  provide. 

(A) :  9.  All  indemnities  provided  in  this  policy  will  be  paid 
after  receipt  of  due  proof. 

(B)  :  9.  All  indemnities  provided  in  this  policy  for  loss  other 

than  that  of  time  on  account  of  disability  will  be  paid 

after  receipt  of  due  proof. 

(10)  A  standard  provision  relative  to  periodica}  payments  of 
indemnity  for  loss  of  time  on  account  of  disability,  which  pro- 
vision shall  be  in  the  following  form,  and  which  may  be  omitted 
from  any  policy  not  providing  for  such  indemnity.  The  insurer 
shall  insert  in  the  first  blank  space  of  the  form  appropriate 
language  to  designate  the  proportion  of  accrued  indemnity  it  may 
desire  to  pay,  which  proportion  may  be  all  or  any  part  not  lessf 
than  one-half,  and  in  the  second  blank  space  shall  insert  any 
period  of  time  not  exceeding  sixty  days: 

10.  Upon  request  of  the  insured  and  subject  to  due  proof  of 
loss accrued  indemnity  for  loss  of  time  on  ac- 
count of  disability  will  be  paid  at  the  expiration  of  each 

during  the  continuance  of  the  period  for  which  the  insurer  is 
liable,  and  any  balance  remaining  unpaid  at  the  termination  of 
such  period  will  be  paid  immediately  upon  receipt  of  due  proof. 

(11)  A  standard  provision  relative  to  indemnity  payments 
which  may  be  in  either  of  the  two  following  forms:  Form  {A)  to 
be  used  in  policies  which  designate  a  beneficiary,  and  Form  (B) 
to  be  used  in  policies  which  do  not  designate  any  beneficiary 
other  than  the  insured. 

(A)  :  11.  Indemnity  for  loss  of  life  of  the  insured  is  payable 
to  the  beneficiary  if  surviving  the  insured,  and  otherwise  to  the 
estate  of  the  insured.  All  other  indemnities  of  this  policy  are 
payable  to  the  insured. 

(B) :  11.  All  the  indemnities  of  this  policy  are  payable  to  the 
insured. 


204  The  Insurance  Law.  §  107. 

(12)  A  standard  provision  providing  for  cancellation  of  the 
policy  at  the  instance  of  the  insured  which  shall  he  in  the  follow- 
ing form: 

12.  If  the  insured  shall  at  any  time  change  his  occupation  to 
one  classified  by  the  insurer  as  less  hazardous  than  that  stated 
in  the  policy,  the  insurer,  upon  written  request  of  the  insured 
and  surrender  of  the  policy,  will  cancel  the  same  and  will  return 
to  the  insured  the  unearned  premium. 

(13)  A  standard  provision  relative  to  the  rights  of  the  bene- 
ficiary under  the  policy  which  shall  he  in  the  following  form  and 
which  may  he  omitted  from  any  policy  not  designating  a, 
heneficiary  : 

13.  Consent  of  the  beneficiary  shall  not  be  requisite  to  sur- 
render or  assignment  of  this  policy,  or  to  change  of  beneficiary, 
or  to  any  other  changes  in  the  policy. 

(14)  A  standard  provision  limiting  the  time  within  which  suit 
may  he  hr ought  upon  the  policy  as  follows: 

14.  1^0  action  at  law  or  in  equity  shall  be  brought  to  recover 
on  this  policy  prior  to  the  expiration  of  sixty  days  after  proof 
of  loss  has  been  filed  in  accordance  with  the  requirements  of 
this  policy,  nor  shall  such  action  be  brought  at  all  unless  brought 
within  two  years  from  the  expiration  of  the  time  within  which 
proof  of  loss  is  required  by  the  policy. 

(15)  A  standard  provision  relative  to  time  limitations  of  the 
policy  as  follows: 

15.  If  any  time  limitation  of  this  policy  with  respect  to  giving 
notice  of  claim  or  furnishing  proof  of  loss  is  less  than  that 
permitted  by  the  law  of  the  state  in  which  the  insured  resides 
at  the  time  this  policy  is  issued,  such  limitation  is  hereby  ex- 
tended to  agree  with  the  minimum  period  permitted  by  such  law. 

Subd.  (d).  No  such  policy  shall  be  so  issued  or  delivered 
which  contains  any  provision  (1)  relative  to  cancellation  at  the 
instance  of  the  insurer;  or,  (2)  limiting  the  amount  of  indemnity 


§   107.  Life,  Health,  Casuaety  Cokpokations.  206 

to  a  sum  less  than  the  amount  stated  in  the  policy  and  for  which 
the  premium  has  been  paid;  or,  (3)  providing  for  the  deduction 
of  any  premium  from  the  amount  paid  in  settlement  of  claim; 
or,  (4)  relative  to  other  insurance  by  the  same  insurer;  or,  (5) 
relative  to  the  age  limits  of  the  policy;  unless  such  provisions 
which  are  hereby  designated  as  optional  standard  provisions,  shall 
be  in  the  words  and  in  the  order  in  which  they  are  hereinafter 
set  forth,  but  the  insurer  may  at  its  option  omit  from  the  policy 
any  such  optional  standard  provision.  Such  optional  standard 
provisions  if  inserted  in  the  policy  shall  immediately  succeed 
the  standard  provisions  named  in  subdivision  (c)  of  this  section. 

(1)  An  optional  standard  provision  relative  to  cancellation  of 
the  policy  at  the  instance  of  the  insurer  as  follows: 

16.  The  insurer  may  cancel  this  policy  at  any  time  by  written 
notice  delivered  to  the  insured  or  mailed  to  his  last  address,  as 
shown  by  the  records  of  the  insurer,  together  with  cash  or  the 
insurer's  check  for  the  unearned  portion  of  the  premiums  actu- 
ally paid  by  the  insured,  and  such  cancellation  shall  be  without 
prejudice  to  any  claim  originating  prior  thereto. 

(2)  An  optional  standard  provision  relative  to  reduction  of 
the  amount  of  indemnity  to  a  sum  less  than  that  stated  in  the 
policy  as  follows: 

17.  If  the  insured  shall  carry  v^ith  another  company,  corpora- 
tion, association  or  society  other  insurance  covering  the  same  loss 
without  giving  written  notice  to  the  insurer,  then  in  that  case 
the  insurer  shall  be  liable  only  for  such  portion  of  the  indemnity 
promised  as  the  said  indemnity  bears  to  the  total  amount  of  like 
indemnity  in  all  policies  covering  such  loss,  and  for  the  return 
of  such  part  of  the  premium  paid  as  shall  exceed  the  pro  rata 
for  the  indemnity  thus  determined. 

(3)  An  optional  standard  provision  relative  to  deduction  of 
premium  upon  settlement  of  claim  as  follows: 

18.  Upon  the  payment  of  claim  hereunder  any  premium  then 
due  and  unpaid  or  covered  by  any  note  or  written  order  may  he 
deducted  therefrom. 


206  The  Insurance  Law.  §  107. 

(4)  An  optional  standard  provision  relative  to  other  insurance 
by  the  same  insurer  which  shall  he  in  such  one  of  the  following 
forms  as  may  he  appropriate  to  the  indemnities  'provided,  and  icfi 
the  hla^k  spaces  of  which  the  insurer  shall  insert  such  upward 
limits  of  indemnity  as  are  specified  hy  the  insurers'  classification 
of  rishs,  filed  as  required  hy  this  section. 

(A) :  19.  If  a  like  policy  or  policies,  previously  issued  by  tlie 
insurer  to  the  insured  be  in  farce  concurrently  berewith,  making 

the  aggregate  indemnity  in  excess  of  $ , 

the  excess  insurance  shall  be  void  and  all  premiums  paid  for 
such  excess  shall  be  returned  to  the  insured. 

(B)  :  19.  If  a  like  policy  or  policies,  previously  issued  by  the 
insurer  to  the  insured  be  in  force  concurrently  herewith,  making 
the  aggregate  indemnity  for  loss  of  time  on  account  of  disability 

in  excess  of  $ weekly,  the  excess  insurance  shall 

be  void  and  all  premiums  paid  for  such  excess  shall  be  returned 
to  the  insured. 

(C)  :  19.  If  a  life  policy  or  policies,  previously  issued  by  the 
insurer  to  the  insured  be  in  force  concurrently  herewith,  making 
the  aggregate  indemnity  for  loss  other  than  that  of  time  on  account 

of  disability  in  excess  of  $ ,  or  the  aggregate  indemnity 

for  loss  of  time  on  account  of  disability  in  excess  of  $ 

weekly,  the  excess  insurance  of  either  kind  shall  be  void  and  all 
premiums  paid  for  such  excess  shall  be  returned  to  the  insured. 

(5)  An  optional  standard  provision  relative  to  the  age  liinits 
of  the  policy  which  shall  he  in  the  following  form  and  in  the 
blank  spaces  of  which  the  insurer  shall  insert  such  number  of 
years  as  it  may  elect: 

20.  The  insurance  under  this  policy  shall  not  cover  any  per- 
son under  the  age  of years  nor  over  the  age  of 

years.     Any  premium  paid  to  the  insurer  for  any 

period  not  covered  by  this  policy  will  be  returned  upon  request. 


§  107.         Life,  Health,  Casualty  Cok'poiiations.  207 

Subd.  (e).  No  such  policy  shall  be  so  issued  or  delivered  if  it 
contains  any  provision  contradictory,  in  whole  or  part,  of  any  of 
the  provisions  hereinbefore  in  this  section  designated  as  "  Stand- 
ard Provisions  "  or  as  ''  Optional  Standard  Provisions ;  "  nor  shall 
any  endorsements  or  attached  papers  vary,  alter,  extend,  be  used 
as  a  substitute  for,  or  in  any  way  conflict  with  any  of  the  said 
"  Standard  Provisions  "  or  the  said  "  Optional  Standard  Pro- 
visions ;  "  nor  shall  such  policy  be  so  issued  or  delivered  if  it  con- 
tains any  provision  purporting  to  make  any  portion  of  the  charter, 
constitution  or  by-laws  of  the  insurer  a  part  of  the  policy  unless 
such  portion  of  the  charter,  constitution  or  by-laws  shall  be  set 
forth  in  full  in  the  policy,  but  this  prohibition  shall  not  be  deemed 
to  apply  to  any  statement  of  rates  or  classification  of  risks  filed 
with  the  superintendent  of  insurance  in  accordance  with  the  pro- 
visions of  this  section. 

Subd.  (f).  The  falsity  of  any  statement  in  the  application  for 
any  policy  covered  by  this  section  shall  not  bar  the  right  to  re- 
covery thereunder  unless  such  false  statement  was  made  with 
actual  intent  to  deceive  or  unless  it  materially  affected  either  the 
acceptance  of  the  risk  or  the  hazard  assumed  by  the  insurer. 

Subd.  (g).  The  acknowledgment  by  any  insurer  of  the  receipt 
of  notice  given  under  any  policy  covered  by  this  section,  or  the 
furnishing  of  forms  for  filing  proofs  of  loss,  or  the  acceptance  of 
such  proofs,  or  the  investigation  of  any  claim  thereunder  shall 
not  operate  as  a  waiver  of  any  of  the  rights  of  the  insurer  in  de- 
fense of  any  claim  arising  under  such  policy. 

Subd.  (h).  No  alteration  of  any  written  application  for  insur- 
ance by  erasure,  insertion  or  otherwise,  shall  be  made  by  ary 
person  other  than  the  applicant  without  his  written  consent,  and 
the  making  of  any  such  alteration  without  the  consent  of  the 
applicant  shall  be  a  misdemeanor.  If  such  alteration  shall  be 
made  by  any  officer  of  the  insurer,  or  by  any  employee  of  the 
insurer  with  the  insurer's  knowledge  or  consent,   then  such  act 


^0§  The  Insurai^ce  Law.  §  107, 

shall  be  deemed  to  have  been  performed  by  the  insurer  thereafter 
issuing  the  policy  upon  such  altered  application. 

Subd.  (i).  A  policy  issued  in  violation  of  this  section  shall  be 
held  valid  but  shall  be  construed  as  provided  in  this  section  and 
when  any  provision  in  such  a  policy  is  in  conflict  with  any  pro- 
vision of  this  section,  the  rights,  duties  and  obligations  of  the 
insurer,  the  policyholder  and  the  beneficiary  shall  be  governed  by 
the  provisions  of  this  section. 

Subd.  (j).  The  policies  of  insurance  against  accidental  bodily 
injury  or  sickness  issued  by  an  insurer  not  organized  under  the 
laws  of  this  state  may  contain,  when  issued  in  this  state,  any 
provision  which  the  law  of  the  state,  territory  or  district  of  the 
United  States  under  which  the  insurer  is  organized,  prescribes 
for  insertion  in  such  policies,  and  the  policies  of  insurance  against 
accidental  bodily  injury  or  sickness  issued  by  an  insurer  organized 
under  the  laws  of  this  state  may  contain,  when  issued  or  delivered 
in  any  other  state,  territory,  district  or  country,  any  provision  re- 
quired by  the  laws  of  the  state,  territory,  district  or  country  in 
which  the  same  are  issued,  anything  in  this  section  to  the  contrary 
notwithstanding. 

Subd.  (k).  (1)  Nothing  in  this  section,  however,  shall  apply 
to  or  affect  any  policy  of  liability  or  workmen's  compensation 
insurance  or  any  general  or  blanket  policy  of  insurance  issued  to 
any  municipal  corporation  or  department  thereof,  or  to  any  corpo- 
ration, copartnership,  association  or  individual  employer,  police 
or  fire  department,  underwriters'  corps,  salvage  bureau,  or  like 
associations  or  organizations,  where  the  officers,  members  or  em- 
ployees or  classes  or  departments  thereof  are  insured  for  their 
individual  benefit  against  specified  accidental  bodily  injuries  or 
sickness  while  exposed  to  the  hazards  of  the  occupation  or  other- 
wise in  consideration  of  a  premium  intended  to  cover  the  risks  of 
all  tlie  persons  insured  under  such  policy. 


§   107.  Life,  IlKAi/nr,  Casuat.ty  Corporations.  20-9 

(2)  Nothing  in  this  section  shall  apply  to  or  in  any  way  affect 
contracts  supplemental  to  contracts  of  life  or  endowment  insur- 
ance where  such  supplemental  contracts  contain  no  provisions 
except  such  as  operate  to  safeguard  such  insurance  against  lapse 
or  to  provide  a  special  surrender  value  therefor  in  the  event  that 
the  insured  shall  be  totally  and  permanently  disabled  by  reason 
of  accidental  bodily  injury  or  by  sickness;  provided  that  no  such 
supplemental  contract  shall  be  issued  or  delivered  to  any  person 
in  this  state  unless  and  until  a  copy  of  the  form  thereof  has  been 
submitted  to  and  approved  by  the  superintendent  of  insurance, 
under  such  reasonable  rules  and  regulations  as  he  shall  make  con- 
cerning the  provisions  in  such  contracts  and  their  submission  to 
and  approval  by  him. 

(3)  Nothing  in  this  section  shall  apply  to  or  in  any  way  affect 
fraternal  benefit  societies. 

(4)  The  provisions  of  this  section  contained  in  clause  (5)  of 
subdivision  (b)  and  clauses  (2),  (3),  (8)  and  (12)  of  subdivision 
(c)  may  be  omitted  from  railroad  ticket  policies  sold  only  at  rail- 
road stations,  or  at  railroad  ticket  offices  by  railroad  employees. 

Subd.  (I).  Any  company,  corporation,  association,  society  or 
other  insurer  or  any  officer  or  agent  thereof,  which  or  who  issues 
or  delivers  to  any  person  in  this  state  any  policy  in  willful  viola- 
tion of  the  provisions  of  this  section  shall  be  punished  by  a  fine  of 
not  more  than  five  hundred  dollars  for  each  offense,  and  the  super- 
intendent of  insurance  may  revoke  the  license  of  any  company, 
corporation,  association,  society  or  other  insurer  of  another  state 
or  country,  or  of  the  agent  thereof,  which  or  who  willfully  violates 
any  provision  of  this  section. 

Subd.  (m).  The  term  "  indemnity "  as  used  in  this  section 
means  benefits  promised. 

Former  §  107,  added  by  L.  1910,  chap.  636,  repealed  by  L.  1913.  chap.  155. 

Added  by  L.  1913,  chap.  155.    In  effect  October  1,  1913. 

Note. — The  amendment  of  this  section  by  chapter  155  of  1913  repealed 
former  section  107  and  inserted  two  new  sections,  numbers  107  and  108,  pre- 
scribing standard  provisions  for  health  and  accident  policies  and  prohibiting 
discriminations.  By  the  terms  of  section  107,  certain  standard  provisions 
which  must  be  used  by  all  corporations  of  this  character  are  made  part  of  the 


210  The  Insurance  Law.  §   108. 

statute,  such  provisions  having  been  prepared  for  the  purpose  of  correcting 
certain  practices  found  to  exist  in  health  and  accident  insurance  business. 
This  law  has  been  approved  by  the  National  Ctonvention  of  Insurance  Com- 
missioners.— Ed. 

Note. — The  purpose  of  the  addition  of  sections  107  and  108  by  chapter  155 
of  L.  1913,  was  to  correct  certain  practices  found  to  exist  in  the  health  and 
accident  insurance  business  and  to  meet  some  objectionable  features  of  the 
policy  contracts  used  by  this  class  of  corporations  by  compelling  certain 
standard  provisions  to  be  used  by  all  corporations  of  this  character. — Ed. 

The  holder  of  a  life  or  accident  policy  held  not  to  be  entitled  to  the  sick 
indemnity  when  he  had  paid  the  premium  when  it  web  past  due.  Greenwaldt  v. 
U.  S.  H.  &  A.  Ins.  Co.,  52  Misc.,  353. 

§  108.  Discriminations  under  accident  or  health  policies 
prohibited. 

'Nk}  insurance  corporation  authorized  to  make  insurance  in 
this  state  under  subdivision  two  of  section  seventy  of  this  chap- 
ter, nor  any  agent  of  sucli  corporation,  shall  make  or  permit  any 
discrimination  between  individuals  of  the  same  class  in  the  amount 
of  premiums,  policy  fees,  or  rates  charged  for  any  policy  of  acci- 
dent or  health  insurance,  or  in  the  benefits  payable  thereunder, 
or  in  any  of  the  terms  or  conditions  of  such  insurance  contract, 
or  in  any  other  manner  whatsoever.  Any  person  or  corporation 
violating  any  provision  of  this  section  shall  be  guilty  of  a  misde- 
meanor, and  shall  forfeit  to  the  people  of  the  state  the  sum  of 
five  hundred  dollars  for  each  such  violation. 

Added  by  L.  1913,  chap.  155.    In  effect  October  1,  1913. 
Note. — For  purpose  of  addition  of  this  section  see  note  to  §  107  ante. 
It  is  not  lawful  for  a  company  to  have  in  use  at  the  same  time  two  tables 
of  rates  for  the  same  class  of  policies.     Ruling  Ins.  Dept.,  March  1,  1915. 


FiEE  Insurance  Cokpokation.  211 

AETICLE  IIL 

FiBE  Insurance  Cokpokation. 

Section  110.  Incorporation. 

111.  Mutual  fire  insurance  corporations. 

112.  Subscriptions  to  capital. 

113.  Capital  stock  notes  and  deposit  notes. 

114.  May  unite  cash  capital  as  an  additional  security. 

115.  Deposit  notes  and  cash  payments  by  members  of  mutual  cor 

porations. 

116.  Assessments  in  mutual  corporations. 

117.  How  surplus  profits  to  be  estimated. 

118.  Allowance  of  assets  and  estimation  of  liabilities  upon  exami- 

nations. 

119.  Liability  of  directors  and  corporators. 

120.  What  to  appear  on  face  of  policy. 

121.  Standard  fire  insurance  policy  to  be  prescribed  and  used. 
121-a.  Appointment  of  umpire  by  court. 

122.  Payment  of  return  premiums  on  cancellation  of  policy* 

123.  Cancellation  of  policies  by  receiver  and  issue  of  certificates  oJ 

indebtedness. 

124.  Extension  of  joint -stock  corporations. 

125.  Mutual  may  become  stock  corporations. 

126.  Extension  of  term  of  charter  of  mutual  corporations. 

127.  Existing  corporations  may  reincorporate. 

128.  Duration  of  charter. 

129.  Merger  or  consolidation  of  fire  insurance  corporations. 

130.  Guaranty  and  special  reserve  funds. 

131.  Funds,  how  invested. 

132.  Proceedings  in  case  of  extensive  conflagrations. 

132-a.  Discontinuance  of  special  reserve  and  guaranty  surplus  funds. 

133.  Payment  of  tax  by  agents  of  foreign  fire  insurance  corporationv 

to  fire  departments. 

134.  Undertaking  of  agent. 

135.  Penalty  for  refusal  to  pay. 

136.  Penalty  for  refusal  to  exhibit  foreign  fire  policies. 

137.  License  to  agents  in  excepted  cases 

138.  License  to  persons,  partnerships,  associations  and  corporations  in 

excepted  cases. 
138-a.  Public  adjusters;  certificate  of  authority. 

139.  Organizations  for  assisting  underwriters   in  insurance  business 

generally. 

140.  Organizations  for  assisting  in  establishing  insurance  rates. 

141.  Hate-making  associations. 

142.  Agent's  certificate  of  authority. 

143.  Broker's  certificate  of  authority. 

144.  Fee  not  to  be  included  in  consideration  for  fire  insurance. 

145.  Report  of  consideration  to  company. 

146.  Fees  and  charges  to  be  indorsed  on  policy. 


212  The  Insueance  Law.  §  110. 

Section  147.  Penalty  for  violation  by  company. 

148.  Penalties  for   violations  by  officers  and  agents.  ^ 

149.  Aut'horizaition  of  foreign  mutual  fire  insurance  corporations. 
149a.  Premium  or  assesisment  tax. 

149b.  Agents. 

149c.  Distribution  of  annual  tax. 

'Section  110'.    Incorporation. 

Thirteen  or  more  persons  may  become  a  corporation  for  tlie 
purposes  of  making  insurances  on  dwelling-liouses,  stores  and  all 
kinds  of  buildings  and  housebold  furniture,  and  otber  property 
against  loss  or  damage,  including  loss  of  use  or  occupancy,  by  fire, 
ligbtning,  windstorm,  tornado,  cyclone,  earthquake,  bail,  frost  or 
snow,  and  by  explosion  whether  fire  ensues  or  not,  except  explo- 
sion on  risks  specified  in  subdivision  seven  of  section  seventy  of 
this  chapter,  and  also  against  loss  or  damage  by  water  to  any  goods 
or  premises  arising  from  the  breakage  or  leakage  of  sprinklers, 
pumps  or  other  apparatus  erected  for  extinguishing  fires,  and  of 
water  pipes,  and  against  accidental  injury  to  such  sprinklers, 
pumps  or  other  apparatus,  and  upon  vessels,  boats,  cargoes,  goods, 
merchandise,  freights  and  other  property  against  loss  or  damage  by 
all  or  any  of  the  risks  of  lake,  river,  canal  and  inland  navigation 
and  transportation,  as  well  as  by  any  or  all  of  the  risks  specified  in 
section  150'  of  this  chapter,  including  insurances  upon  automobiles, 
whether  stationary  or  being  operated  under  their  own  power, 
which  shall  include  all  or  any  of  the  hazards  of  fire,  explosio-n, 
transportation,  collision,  loss  by  legal  liability  for  damage  to  prop- 
erty resulting  from  the  maintenance  and  use  of  automobiles,  and 
loss  by  burglary  or  theft  or  both,  but  shall  not  include  insurance 
against  loss  by  reason  of  bodily  injury  to  the  person,  and  to 
effect  reinsurance  of  any  risks  taken  by  it,  by  filing  in  the  office  of 
the  superintendent  of  insurance  a  declaration  signed  by  all  of 
them  of  their  intention  to  form  a  corporation  for  the  purpose  of 
transacting  the  business  of  making  any  or  all  of  such  insurances, 
which  shall  comprise  a  copy  of  the  charter  proposed  to  be  adopted 
by  them,  setting  forth  the  name  of  the  corporation,  the  place  of 
location  of  its  office,  the  mode  in  which  its  corporate:  powers  are  to 
be  exercised  and  its  directors  elected,  a  majority  of  whom  shall 
be  citizens  of  this  state,  and  if  a  stock  corporation,  the  owner  in 
his  own  right  of  at  least  five  hundred  dollars  of  the  stock  of  the 
corporation  at  its  par  value,  the  mode  of  filling  vacancies  in  the 
office  of  director,  the  period  for  the  commencement  and  termina- 


§  110.  FiEE  Insurance  Corpokation.  213 

tion  of  its  fiscal  year  and  the  amount  of  capital  to  be  employed 
in  the  transaction  of  its  business;  provided  that  a  corporation 
including  in  its  charter  a  provision  to  assume  any  of  the  risks  of 
ocean  marine  insurance  as  specified  in  section  150  of  this  chapter 
must  have  a  capital,  paid  in  in  cash,  of  at  least  $400,000. 

1^0  such  declaration  shall  be  filed,  unless  the  persons  signing  the 
same  shall  have  previously  published  for  at  least  two  weeks  succes- 
sively a  notice  of  their  intention  to  form  such  a  corporation  in  a 
public  newspaper  in  the  county  wliere  its  olHce  is  to  be  located. 

Every  such  corporation  shall  be  known  as  a  fire  insurance  cor- 
poration. No  sucb  corporation  shall  directly  or  indirectly  deal  or 
trade  in  buying  or  selling  any  goods,  wares,  merchandise  or  other 
commodities  whatever,  except  such  articles  as  may  be  insured  by  it, 
and  are  claimed  to  be  damaged  by  any  cause  so  insured  against 

Source.— Former  §  110,  as  amended  by  L.  1907,  chaps.  206  and  503;  L.  1908, 
chap.  346;  originally  revised  from  L.  1853,  chap.  466,  §§  1-2,  4-5,  3,  as  amended 
by  L.  1873,  chap.  851;  L.  1861,  chap.  92,  §§  1,  2;  L.  1880,  chap.  452;  L.  1882, 
ohap.  218. 

Amended  by  L.  1910,  chap.  168;  L.  1911,  chap.  126  and  L.  1913,  chap.  296. 

Note. — The  purpose  of  the  amend-ment  of  this  section  by  chapter  296  of 
1913  was  to  give  fire  insurance  corporations  all  the  corporate  rights  belonging 
to  this  class  of  corporations  vt^hich  are  already  accorded  to  them  under  the 
laws  of  other  states  by  adding  to  those  they  already  possess  the  right  to  in- 
sure against  cyclone,  hail,  frost,  snow  and  by  explosion  whether  fire  ensues 
or  not. — Ed. 

Note. — 'The  purpose  of  the  amendment  by  K  1910,  chap.  168,  was  to  allow  a 
fire  company  to  write  ocean  marine  insurance,  also  provided  in  its  charter 
empowered  it  specifically  so  to  do  and  it  possessed  a  paid-in  capital  of 
$400,000.—  Ed. 

The  amendment  by  chap.  206  of  1907  added  the  words  "  including  insurance! 
upon  automobiles  whether  stationary  or  being  operated  under  their  own 
power;  "  the  subsequent  amendment  by  chap.  503  of  1907  struck  out  these 
words  and  added  the  word  "  earthquakes."  The  words  "  including  insurances 
upon  automobiles,  etc.,"  were  also  added  to  §  150  post  by  said  chap.  206  of 
1907. 

See  §  6,  ante.     Fees  for  filing  declaration,  etc.,  with  superintendent. 

See  §  10,  ante.  Certificate  of  attorney-general;  corporate  names;  number 
of  directors. 

See  §  11,  ante.     Examination  by  superintendent  as  to  capital  stock,  etc. 

See  §  12,  ante.    Minimum  capital  stock  of  fire  or  marine  company. 

See  chap.  733  of  1900.    Reincorporation  of  foreign  moneyed  corporation. 

See  chap.  205  of  1903.  Fire  insiu-anee  company  for  Roman  Catholic  Diocese 
of  Brooklyn. 

It  is  unlawful  for  a  fire  insurance  company,  engaged  in  business  in  this 
State,   to  guarantee   payment  of   claims    found   to  be   due    upon    policies   of 


214  The  Insurance  Law.  §  111. 

another  fire  insurance  company  doing  business  in  this  State.     Attorney-Gen- 
eral Rep.,  Sept.  4,  1902. 

DOMESTIC  ANIMALS. —  Only  legally  organized  fire  insurance  companies 
can  insure  against  loss  of  domestic  animals  by  fire.  Attorney-General  Rep.., 
1893,  page  317. 

LLOYDS. — Action  against  Lloyds  under  §  1948  of  the  Code  of  Civil  Procedure 
for  carrying  on  business.     People  v.  Loew,  19  Misc.,  248. 

SUBSCRIPTIONS. —  Section  110  does  not  require  organization  papers  of  a 
stock  insurance  company  to  be  accompanied  by  any  subscription  for  capital 
stock,  and  as  section  112  provides  for  opening  books  for  stock  subscription,  the 
corporation  is  created  before  subscriptions  are  invited;  subscriptions  are  gov- 
erned by  section  53  (formerly  section  51),  Stock  Corporatioi'  Law.  and  are  void 
unless  ten  per  cent  be  paid.    Van  Schaick  v.  Mackin,  129  App.  Div.,  335. 

§  113  of  the  Insurance  Law  seems  to  construe  §  110  as  solicitous  only 
that  tihe  $200,000  capital  be  adequately  secured,  and  not  as  insisting  that  the 
precise  provisions  precedent  in  §  111,  asi  to  doing  business  in  New  York  and 
Kiugs  counties,  continue  in  force  in  a  case  where  the  $200,000  is  already  held 
in  accumulated  profits.    Attorney-General  Rep.,  Oct  15,  1913;  July  23,  1913. 

§  111.    Mutual  fire  insurance  corporations. 

No  domestic  mutual  fire  insurance  corporation  shall  commence 
business  if  located  in  the  city  of  New  York,  as  said  city  existed 
on  tlie  first  day  of  October,  eighteen  hundred  and  ninety-two,  or 
in  the  county  of  Kings,  nor  establish  any  agency  for  the  trans- 
action of  business  in  either  New  York  or  Kings  county,  until 
agreements  have  been  entered  into  for  insurance  with  four  hundred 
applicants,  citizens  of  this  state  and  freeholders,  each  owning  real 
estate  within  this  state  to  the  value  of  at  least  five  thousand  dollars, 
the  premiums  on  which  insurance  shall  amount  to  two  hundred 
thousand  dollars,  of  which  forty  thousand  dollars  shall  have  been 
paid  in,  in  cash,  and  notes  of  solvent  parties,  founded  on  actual 
diid  bona  fide  applications  for  insurance,  shall  have  been  re- 
ceived for  the  remainder.  No  such  corporation  in  any 
other  county  of  the  state  shall  commence  business  until  agree- 
ments have  been  entered  into  for  insurance  with  at  least  two  hun- 
dred applicants,  citizens  of  this  state  and  freeholders,  each  owning 
real  estate  within  this  state  to  the  value  of  at  least  two  thousand 
five  hundred  dollars,  the  premiums  on  which  insurance  shall 
amount  to  one  hundred  thousand  dollars,  of  which  twenty  thou- 
sand dollars  shall  have  been  paid  in  in  cash,  and  notes  of  solvent 
parties,  founded  on  actual  and  bona  fide  applications  for  insur- 


§   111.  Fire  Insueance  Corpobation.  215 

unce,  shall  have  been  received  for  the  remainder.  No  one  of  such 
notes  shall  amount  to  more  than  five  hundred  dollars.  No  two 
shall  be  given  for  the  same  risk,  or  be  made  by  the  same  person  or 
firm,  except  where  the  whole  amount  of  such  notes  shall  not  exceed 
five  hundred  dollars.  No  such  note  shall  be  represented  as  capital 
stock  unless  a  policy  be  issued  upon  the  same  within  thirty  daya 
after  the  organization  of  the  corporation  upon  a  risk  located  within 
this  state,  and  such  policy  shall  be  for  no  shorter  period  than  one 
year.  Such  notes  shall  be  called  capital  stock  notes  and  shall  be 
payable,  in  part  or  whole,  at  any  time  when  the  directors  shall 
deem  the  same  requisite  for  tlie  payment  of  losses  and  such  inci- 
dental expenses  as  may  be  necessary  for  transacting  the  business 
of  the  corporation.  The  solvency  of  each  of  the  makers  of  such 
notes  shall  be  examined  into  by  the  superintendent  of  insurance, 
or  by  one  or  more  competent  and  disinterested  persons  specially 
appointed  by  him  for  that  purpose.  No  note  shall  be  received 
as  a  capital  stock  note  unless  the  maker  thereof  shall  be  approved 
by  the  superintendent  of  insurance,  or  by  the  person  or  persons  ap- 
{)ointed  by  him  for  that  purpose,  as  being  pecuniarily  good  and  re- 
sponsible for  the  same,  and  is  also  owner  of  real  estate  as  required 
by  this  section,  nor  until  such  note  has  heen  finally  approved  by 
the  superintendent  of  insurance.  No  such  note  shall  be  valid  as  a 
capital  stoclc  note,  unless  the  corporators  or  officers  of  such  corpora- 
tion shall  certify  under  oath  that  it  is  the  bona  fide  property  of  the 
corporation.  No  domestic  mutual  fire  insurance  corporation  trans- 
acting business  with  capital  stock  notes  or  deposit  notes  shall 
underwrite  any  property  not  located  within  this  state,  or  reinsure 
policies  written  upon  such  property  by  other  insurance  corpora- 
tions. 

Source. — Former  §  111,  as  amended  by  L.  1898,  chap.  147;  originally  revised 
from  L.  1853,  cliap.  466,  §  6,  as  amended  by  L.  1862,  chap.  367. 

See  §  12,  ante.  Minimum  capital  stock  of  fire  and  marine  companies.  And 
note  that  this  section,  because  of  the  enactment  of  L.  1913,  ch.  92,  is  now 
undoubtedly  in  force. 

VIOLATION. —  A  company  which  had,  when  it  began  business,  $40,000 
in  cash  in  the  bank,  the  proceeds  of  certain  sight  drafts  deposited  by  it  with 
the  bank,  being  20  per  cent  of  the  $200,000  worth  of  premiums  referred  to 
in  this  section,  and  made  by  statute  a  preliminary  requirement  to  the  trans- 
action of  any  business,  has  not  in  any  manner  violated  this  section.  People  v. 
Equitable  Mut.  Ins.  Corp.,  1  App.  Div.,  84. 

SPECIAL  CHARTERS. —  Mutual  fire  insurance  companies  doing  business 
in  this  state  under  special  laws  passed  prior  to  chap.  308  of  1849  have  the 
right  to  transact  business  according  to  the  terms  of  their  original  charter  until 
the  same  expires.    Attorney-General  Rep.,  1897,  page  148. 


216  The  Insurance  Law.  §  111. 

NOTE  GIVEN  FOR  INSURANCE.— A  note  given  to  a  mutual  insurance 
company,  for  premiums  in  advance,  payable  "  in  such  portions,  and  at  such 
time  or  times,  as  the  directors  of  the  company  may,  agi-eeably  to  their 
charter  and  by-laws  require,"  is  in  etlect  payable  on  demand.  Hill  v.  Reed, 
16  Barb.,  280. 

A  note  constituting  part  of  the  capital  stock  of  a  mutual  insurance  com- 
pany is  payable  absolutely,  may  be  indorsed  and  transferred  by  the  corpora- 
tion at  its  pleasure,  an^  upon  the  insolvency  of  the  company  may  be 
collected  by  its  receiver.     White  v.  Haight,  16  N.  Y.,  310. 

An  incorporator  of  an  equitable  mutual  fire  insurance  company  who  gives 
to  the  company  a  capital -stock  note,  the  payment  of  which  is  made  subject 
to  the  conditions  of  the  Insurance  Law,  and  who,  upon  the  incorporation  of 
the  company,  receives  the  benefit  of  the  note  in  the  form  of  a  policy  of 
insurance,  and  becomes  one  of  the  directors  of  the  company,  and  acts  in  that 
capacity  until  the  corporation,  becoming  insolvent,  passes  into  the  hands 
of  a  receiver,  is  not  in  a  position  to  interpose,  as  a  defense  to  an  action 
brought  by  the  receiver  to  enforce  payment  of  such  note,  that  because  of  a 
failure  to  comply  with  the  condition  imposed  by  §  111  of  the  Insurance  Law, 
requiring  a  specified  amount  to  be  paid  in  in  cash  by  the  incorporators  before 
the  corporation  was  authorized  to  commence  business,  the  incorporation  was 
illegal.    Raegener  v.  McDougall,  33  App.  Div.,  231. 

The  promise  to  pay  expressed  in  the  note  and  the  requirement  of  §  111 
that  a  policy  must  be  issued  within  thirty  days  after  the  organization  of 
the  corporation  are  independent  covenants,  and  the  issuance  of  the  policy 
within  the  required  time  is  not  a  condition  precedent  to  a  recovery  upon 
the  note.    Raegener  v.  Hubbard,  167  N.  Y.,  301. 

A  person  who  agrees  with  the  promoters  of  a  mutual  fire  insurance  com- 
pany to  become  a  member  thereof  and  delivers  a  capital-stock  note  to  them 
may,  unless  estopped  from  so  doing,  withdraw  his  proposal  for  insurance  and 
secure  the  return  of  his  note  at  any  time  before  the  company  is  actually 
incorporated  and  has  accepted  his  proposition.  Raegener  v.  Brockway,  5P 
A.pp.  Div.,  166. 

All  the  notes  of  a  mutual  insurance  company  constitute  its  capital  stock 
White  V.  Ross,  15  Abb.  Pr.,  66. 

An  insurance  company  is  not  authorized  to  subscribe  to  the  capital  stock 
of  a  mutual  insurance  company,  and  to  agree  to  give  its  notes  in  advance 
for  premiums  on  insurances  to  be  subsequently  etfected.  Berry  v.  Yates,  24 
barb.,   199. 

DIVISION  OF  BUSINESS. —  A  mutual  insurance  company  may  divide  it? 
business  and  risks  into  distinct  departments,  or  classes,  pledging  the  pre- 
miums received  in  each  department  as  the  primary  fund  for  the  payment 
of  losses  in  that  department.    Sands  v.  Boutwell,  26  N.  Y.,  233. 

CAPITAL. —  A  mutual  fire  insurance  company  cannot  insure  property  in 
the  counties  of  New  York  and  Kings  unless  it  has  complied  with  the  pro- 
visions of  §  111  of  the  Insurance  T^w  and  has  organized  with  a  capital  of 
$200,000.    Attorney-General  Rep.,  1896,  page   190. 

§  113  of  the  Insurance  Law  seems  to  construe  §  111  as  solicitous  only 
that  the  $200,000  capital  be  adequately  secured,  and  not  as  insisting  that 
t/he  precise  provisions  precedent  in  §  110,  as  to  doing  business  in  New  York 
and  Kings  counties,  continue  in  force  in  a  case  where  the  $200,000  is  already 
held  in  accumulated  profits.    Attorney-General  Rep.,  1914,  page  78. 


§§  112,  113.   Fire  Insurance  Corporation.         217 

Where  a  receiver  is  appointed  in  an  insolvent  mutual  fire  insurance  com- 
pany, the  outstanding  policies  of  said  company  are  thereupon  cancelled  by 
operation  of  law,  and  subsequent  loss  under  S'uch  policies  are  not  liabilities 
which  may  be  enforced  against  the  receiver.  Attorney-General  Rep.,  July  23, 
1909. 

INCORPORATION. —  Persons  who  have  contracted  with  a  corporation,  as 
such,  cannot  afterwards  raise  the  objection  that  the  company  was  not  legally 
incorporated.    White  v.  Ck)ventry,  29  Barb.,  305. 

This  section  is  construed  by  §  113  as  solicitous  only  that  the  $200,000 
capital  be  adequately  secured  and  does  not  insist  that  the  precise  provisions 
precedent  in  this  section  as  to  doing  business  in  New  York  and  Kings  Counties 
continue  in  force  in  a  case  where  $200,000  is  already  held  in  accumulated 
profits".     Attorney -General's  Rep.,  October  15,  1913;   July  23,  1913. 

§  112.    Subscriptions  to  capital. 

Upon  filing  in  the  office  of  the  superintendent  of  insurance  the 
declaration  and  copy  charter  and  proof  of  publication  of  notice  of 
intention  to  form  a  corporation  as  hereinbefore  required,  which 
proof  of  publication  shall  be  made  by  the  affidavit  of  the  publisher 
of  the  newspaper  in  which  the  notice  was  published,  or  his  foreman 
or  clerk,  such  corporation,  if  a  stock  corporation,  may  open  books 
for  subscription  to  its  capital  stock  and  keep  the  same  open 
until  the  full  amount  specified  in  the  charter  is  subscribed.  If 
it  is  a  mutual  insurance  corporation,  it  may  open  books  to  receive 
propositions  and  enter  into  agreements  and  receive  capital  stock 
notes  in  the  manner  and  to  the  extent  specified  in  this  article. 

Source. — Former  §  112;  originally  revised  from  L.  1853,  chap.  466,  §  7. 

See  §  53,  Stock  Corporation  Law,  chap.  564  of  1890.  Subscriptions  to 
capital  stock. 

See  §  660,  Penal  Law.    Frauds  in  the  organization  of  corporations. 

See  §  662  et  seq.,  Penal  Law.    Fraudulent  issue  of  stock,  etc. 

§  113.    Capital  stocic  notes  and  deposit  notes. 

All  capital  stock  notes  of  any  domestic  mutual  fire  insurance 
corporation  shall  remain  as  security  for  all  losses  and  claims,  until 
the  accumulation  of  profits  invested  as  required  by  law  shall  equal 
the  amount  of  cash  capital  required  to  be  possessed  by  stock  fire 
insurance  corporations,  the  liability  of  each  note  decreasing  pro- 
portionately as  the  profits  are  accumulated.  Any  note  which  may 
have  been  deposited  with  any  mutual  fire  insurance  corporation 
subsequent  to  its  organization  in  addition  to  the  cash  premium  on 


218  The  Insurance  Law.  §  113. 

any  insurance  affected  with  such  corporation,  may,  at  the  expira- 
tion of  the  time  of  such  insurance,  be  relinquished  and  given 
up  to  the  maker  thereof  or  his  representative,  upon  his  paying 
his  proportion  of  all  losses  and  expenses  which  may  have  accrued 
thereon  during  such  term.  The  directors  of  any  such  corporation 
shall  have  the  right  to  determine  the  amount  of  tlie  note  to  be 
given  in  addition  to  the  cash  premium  by  any  person  insured 
therein,  but  in  no  case  shall  the  note  be  more  than  five  times 
the  whole  amount  of  the  cash  premium,  and  every  person  affec^ 
ing  insurance  in  any  mutual  fire  insurance  corporation,  and  his 
heirs,  executors,  administrators  and  assigns  continuing  to  be  bo 
insured,  shall  thereby  become  members  of  the  corporation  during 
the  period  of  insurance,  and  shall  be  bound  to  pay  for  losses  and 
necessary  expenses  accruing  in  and  to  such  corporation  in 
proportion  to  the  amount  of  his  deposit  note  or  notes. 

Source. — Former  §  113;  originally  revised  from  L.  1853,  chap.  466,  §  13,  as 
amended  by  L.  1854,  chap.  369. 

PRIVILEGES. —  In  the  matter  of  certain  rights  and  privileges  of  mutual 
fire  insurance  companies,  organized  under  article  III  of  the  Insurance  Law  of 
this  state,  in  regard  to  capital  stock  and  policies.  Attorney-General  Rep., 
1896,  page  190. 

STATUTE  OF  LIMITATIONS.—  The  statute  of  limitations  is  not  a  defense 
to  the  makers  of  a  capital-stock  note  given  to  a  mutual  fire  insurance 
company  where  the  statute  under  which  it  was  given  was  incorporated  in 
the  note  by  reference  thereto.     Raegener  v.  Mcdicus,  32  Misc.,  591. 

AS  BONA  FIDE  HOLDERS. —  Parties  receiving  from  the  company  capital- 
stock  notes  given  for  the  purpose  of  paying  claims  and  transferred  as 
collateral  security  are  entitled  to  be  protected  as  bona  fide  holders  to  the 
same  extent  and  under  the  same  circumstances  as  parties  who  become 
owners  of  such  paper.    Brockman  v.  Metcalf,  32  N.  Y.,  691. 

NEGOTIABILITY  OF  NOTES.— The  notes  are  in  the  hands  of  the  com- 
pany valid  binding  notes  which  the  company  has  a  right  to  negotiate  for 
the  purpose  of  paying  claims,  or  otherwise,  in  the  course  of  it-s  'business, 
notwithstanding  it  ultimately  appears  that  some  of  the  subscriptions  were 
not  valid  binding  subscriptions.    Holbrook  v.  Basset,  5  Bosw.,  14V. 

Holders  of  policies  in  a  mutual  fire  insurance  company,  who  paid  tlieir 
premiums  in  cash,  occupy  similar  positions  to  holders  of  policies  who  gave 
deposit  notes  for  such  premiums,  and  under  §  115  such  policyholder  is 
entitled,  upon  the  cancellation  of  the  policy,  to  the  return  of  such  cash 
premium.     Raegener  v.  Willard,  44  App.  Div.,  41. 

INCORPORATION.— Tliis  section  construes  §  110  as  solicitous  only  that 
the  $200,000  capital  be  adequately  secured  and  does  not  insist  that  the  pre- 
cise provisions  precedent  in  §  111  as  to  doing  business  in  New  York  and 
Kings  Counties  continue  in  force  in  a  case  where  $200,000  is  already  held  in 
accumulated  profits.    Attorney-General's  Rep.,  October  15,  1913;  July  23,  1913. 


§§  114,  115.   Fire  Insurance  Corporation.         219 

§  114.    May  unite  cash  capital  as  an  additional  security. 

Any  domestic  mutual  fire  insurance  corporation  may  unite  a 
cash  capital  to  any  extent  as  an  additional  security  to  its  members, 
over  and  above  their  cash  premiums  and  premium  notes.  Such  cash 
capital  shall  not  be  less  than  thirty  thousand  dollars,  and  shall  be 
invested  as  capital  of  stock  fire  insurance  corporations  is  required  to 
be  invested.  The  corporation  may  allow  interest  on  such  cash 
capital,  and  a  participation  in  its  profits,  and  prescribe  the  liability 
of  the  owners  thereof  to  share  in  the  losses  of  the  corporation,  and 
such  cash  capital  shall  be  liable  as  the  cash  capital  of  the  corpora- 
tion in  the  payment  of  its  debts.  Such  cash  capital  shall  in  all 
cases  be  paid  in  at  the  organization  of  the  corporation,  and  satis- 
factory evidence  of  that  fact  furnished  to  the  superintendent  be- 
fore it  shall  be  authorized  to  do  business. 

Any  existing  joint-stock  fire  insurance  corporation,  and  any  cor- 
poration formed  under  this  article,  may,  upon  obtaining  the  writ- 
ten consent  of  the  holders  of  three-fourths  in  amount  of  its  stock, 
permit  the  insured  to  participate  in  the  profits  of  the  business  of 
such  corporation,  and  provide  how  far  any  scrip  issued  to  the 
insured  for  such  profits  shall  be  liable  for  the  losses  to  be  sustained. 
Whenever  an  amount  not  less  than  one  hundred  thousand  dollars 
has  been  accumulated,  and  scrip  issued  therefor,  the  corporation 
may,  with  the  written  consent  of  the  holders  of  three-fourths  in 
amount  of  its  stock,  pay  off  and  cancel  an  amount  of  the  original 
cash  capital  equal  to  one-half  of  the  accumulated  profits,  and  so 
may  continue  from  time  to  time  until  the  whole  amount  of  the 
original  cash  capital  is  paid  off.  Before  any  portion  of  such  capi- 
tal stock  shall  be  so  paid  off,  proof  shall  be  made  to  the  superinten- 
dent and  certified  by  him  to  be  satisfactory,  that  an  amount  of 
accumulated  profits  has  been  realized,  scrip  issued  therefor,  and 
investments  made  thereof  in  the  maimer  required  in  this  chapter, 
at  least  equal  to  double  the  amount  so  desired  to  be  paid  off  and 
canceled. 

Source. — Former  §  114;  originally  revised  from  L.  1853,  chap.  466,  §  14. 

§  115.  Deposit  notes  and  cash  payments  by  members  of 
mutual  corporations. 

Every  person  becoming  a  member  of  any  domestic  mutual  fire 
insurance  corporation  by  affecting  insurance  therein,  shall,  before 


220  The  Insurance  Law.  §  115. 

he  receives  his  policy,  deposit  his  promissory  note  for  such  a  sum 
of  money  as  shall  be  determined  by  the  directors  of  the  corpora- 
tion. Such  part  of  such  note,  not  exceeding  twenty  per  cent,  as 
shall  be  required  by  the  by-laws  of  the  corporation,  shall  be  im- 
mediately paid,  and  the  remainder  of  such  deposit  note  shall  be 
payable  in  whole  or  in  part.,  as  the  exigencies  of  tlie  corporation 
shall  require  for  the  payment  of  losses  by  fire  and  incidental  ex- 
penses of  the  corporation.  At  the  expiration  of  the  term  of  insur- 
ance such  note,  or  the  part  thereof  which  shall  remain  unpaid  after 
receiving  thereon  from  the  maker  a  proportionate  share  for  all 
losses  or  expenses  occurring  during  sucb  term,  shall  be  relinquished 
by  the  corporation  to  the  maker,  and  the  corporation  may  loan  such 
portion  of  the  money  received  upon  any  such  note  or  from  any  such 
members  as  may  not  be  immediately  wanted  for  its  use,  if  the  same 
shall  be  secured  by  a  bond  and  a  mortgage  on  unincumbered  real 
property  of  double  the  value  of  the  sum  loaned. 
Source. — Former  §  115;  originally  revised  from  L.  1848,  ohap.  205. 

PREMIUM  NOTES. —  A  note  made  and  delivered  to  persons  organizing  a 
mutual  insurance  company,  for  the  purpose  of  being  presented  to  the  com- 
missioners appointed  by  the  comptroller  to  examine  the  capital  and  securities 
of  such  company,  is  a  premium  note.     Sands  v.  Campbell,  31  N.  Y.,  345. 

A  note  given  for  premiums  on  an  open  policy  of  insurance  to  the  makers, 
and  afterwards  substituted  for  notes  which  had  been  negotiated  by  the 
company  to  the  plaintiffs,  for  the  purpose  of  paying  claims,  or  otherwise,  in 
the  course  of  its  business,  must  be  regarded  as  a  note  of  the  character 
specified  in  the  charter,  and  the  transfer  thereof  to  the  plaintiflfs  by  the  com- 
pany was  lawful,  and  the  title  of  the  plaintiffs  is  indisputable.  Wood  v. 
Wellington,  30  N.  Y.,  218. 

Where  the  company  has  negotiated  a  premium  note  in  the  usual  course 
of  business,  the  title  thereto  is  vested  absolutely  in  the  indorsee;  and  any 
subsequent  arrangement  which  the  company  may  make  with  the  maker  of 
the  note  in  respect  to  its  payment  without  the  assent  or  knowledge  of  the 
indorsee  thereof,  will  not  affect  his  rights,  or  the  rights  of  a  bona  fide  holder 
of  the  same.    Farmer's  Bank  v.  Maxwell,  32  N.  Y.,  579. 

Where  a  premium  note  in  advance  for  the  security  of  dealers  was  given  to 
a  mutual  insurance  company,  at  its  outset  in  business,  and  was  renewed  at 
its  maturity,  the  makers  were  held  liable  to  the  receivers  of  the  company 
in  the  same  manner  as  if  the  occasion  for  its  use  had  arisen  during  the 
currency  of  the  original  note.    Hone  v.  Folger,  1  Sandf .,  474. 

It  is  exceedingly  doubtful  whether  the  directors  of  the  company,  or  any 
agent  with  authority  from  them,  has  power  to  dispense  with  a  compliance, 
on  the  part  of  persons  seeking  insurance,  of  the  statutory  provisions  requir- 
ing the  giving  of  deposit  or  premium  notes.  Gibbs  v.  Richmond  Mut.  Ins. 
Co.,  9  Daly,  203. 


§  115.       Fire  Insurance  Corporation.  221 

The  premium  note  is  part)  and  parcel  of  the  contract  of  insurance,  and, 
with  the  policy,  constitutes  the  whole  of  the  transaction.  One  part  cannot 
be  cancelled  and  the  other  remain  in  full  force,  without  the  consent  of  both 
parties.     Campbell  v.  Adams,  38  Barb.,   132. 

A  note  given  to  the  company  for  premiums  in  advance  is  a  valid  security, 
and  may  be  transferred  to  a  party  who  has  insured  in  the  company,  on 
account  of  a  claim  for  a  loss.     Howland  v.  Myer,  3  N.  Y.,  290. 

A  provision  in  the  policy  of  a  marine  insurance  company  that  the  amount 
of  the  premium  note  and  all  other  debts  to  the  company  should  be  first 
paid  or  secured,  before  anything  should  be  due  upon  a  loss  to  the  insured, 
was  intended  primarily  for  the  protection  and  security  of  the  company;  but 
that  it  also  created  the  reciprocal  obligation  that  the  company  should  not 
demand  payment  of  the  note  until  they  had  paid  losses.  Osgood  v.  De 
Groot,  3G  N.  Y..  348. 

A  note  is  valid  by  force  of  the  statute  authorizing  it  to  be  taken  and, 
therefore,  that  a  partial  failure  of  consideration  cannot  be  set  up  to  defoat 
a  recovery  of  the  full  amount.  Deraismes  v.  Merchants'  Mut.  Ins.  Co.,  1 
N.  Y.,  371. 

Holders  of  policies  in  a  mutual  fire  insurance  company,  who  paid  their 
premiums  in  cash,  occupy  similar  positions  to  holders  of  policies  who  gave 
deposit  notes  for  such  premiums,  and  under  §  115,  providing  that  the  maker 
of  a  deposit  note  shall  be  only  liable  for  losses  occurring  during  the  term 
of  the  insurance,  a  policyholder  who  has  paid  the  premium  in  cash  is  entitled, 
upon  the  cancellation  of  the  policy,  to  the  return  of  a  proportion  of  such 
cash  premium.    Raegener  v.  Willard,  44  App.  Div.,  41. 

PREMIUM  NOTES;  STATUTE  OF  LIMITATIONS.— A  premium  note  is 
to  be  regarded  according  to  its  legal  import,  and  not  according  to  its  form; 
the  statute  of  limitations  applies  to  such  a  note  according  to  its  legal  import 
and,  if  a  note  is  made  payable  at  the  end  of  or  within  tweh^e  months  from 
its  date,  will  commence  running  at  the  end  of  a  year  from  the  date  thereof. 
Bell  v.  Yates,  33  Barb.,  627;   Sands  v.  St.  Johns,  36  Barb.,  628. 

The  fact  that  an  assessment  has  already  been  made  upon  a  premium  note 
which  still  remains  unenforced,  will  not  render  a  second  assessment  upon  the 
note,  embracing  the  former  one,  and  designed  to  accomplish  the  same  pur- 
pose, invalid,  where  no  question  arises  as  to  the  statute  of  limitations. 
Sands  v.  Sweet,  44  Barb.,  108;  overruling  Campbell  v.  Adams,  38  Barb.,  132. 

A  note  given  to  a  mutual  insurance  company  to  make  up  its  capital  is,  in 
legal  effect,  payable  on  demand,  i.  e.,  at  its  date,  though  by  its  terms  pay- 
ment was  to  be  made  at  such  times  and  in  such  portions  as  the  directors 
might  require;  no  actual  demand  is  necessary  in  respect  to  such  a  note;  tho 
statute  of  limitations  begins  to  run  against  such  a  note  at  the  time  it  is 
given.    Howland  v.  Edmonds,  24  N.  Y.,  307;  Osgood  v.  Straus,  55  N.  Y.,  672. 

On  a  promissory  note  given  as  a  contingent  guaranty  and  payable  accord- 
ing to  assessments  to  be  made  after  other  assets  are  exhausted,  the  statute 
of  limitations  does  not  begin  to  run  until  that  contingency  occurs.  Hope 
Ins.  Co.  v.  Perkins,  2  Abb.  Ct.  of  App.,  383. 

DEFENSE  TO  PAYMENT  OF  NOTE.— It  is  no  defense  to  an  action  on  a 
note  that  the  losses,  to  the  payment  of  which  the  money  may  be  applied 
when  collected,  have  occurred  after  the  expiration  of  the  period  for  which  the 


222  The  Insurance  Law.  §  116. 

maker  of  the  note  waa  insured,  or  that  no  assessment  was  made  in  respect 
to  such  losses  upon  other  notes  given  to  the  company.  White  v.  Haight, 
16  N.  Y.,  310, 

Where  a  stock  subscription  note,  payable  to  the  order  of  a  mutual  insurance 
company,  is  indorsed  by  its  president  and  negotiated,  and  before  its  maturity 
is  taken  by  a  third  person  in  good  faith,  and  for  full  value  in  the  usual 
course  of  business,  and  it  appears  that  this  is  a  common  mode  of  negotiating 
its  notes,  such  holder  acquires  a  good  title.  Merchants'  Bank  v.  McColl, 
6  Bosw.,  473. 

Where,  in  an  action  by  a  foreign  insiu-ance  corporation  upon  a  note,  it 
only  appears  that  it  was  created  to  effect  insurance  upon  lives,  and  that  the 
note  was  executed  to  it  for  the  premium  on  a  policy  of  insurance  issued 
by  it,  it  will  be  presumed  that  the  insurance  was  such  as  the  company 
was  authorized  to  make  and  that  the  note  was  legal,  until  the  contrary 
appears.    Mut.  Benefit  L.  Ins.  Co.  v.  Davis,  12  N.  Y.,  569. 

§  116.    Assessments  in  mutual  corporations. 

The  directors  shall,  as  often  as  they  deem  necessary,  after  re- 
ceiving notice  of  any  loss  or  damage  by  fire  sustained  by  any  mem- 
ber, and  ascertaining  the  same,  or  after  the  rendition  of  any  judg- 
ment against  the  corporation  for  loss  or  damage,  settle  and  detei^ 
mine  the  sums  to  be  paid  by  the  several  members  thereof  as  their 
respective  portion  of  such  loss,  and  publish  the  same  in  such  man- 
ner as  they  shall  see  fit  or  as  the  by-laws  shall  have  prescribed. 
The  sam  to  be  paid  by  each  member  shall  always  be  in  proportion 
to  the  original  amount  of  his  note  or  notes,  and  shall  be  paid  to  the 
officers  of  the  corporation  within  thirty  days  next  after  the  publi- 
cation of  such  notice.  If  any  member  shall,  for  the  space  of  thirty 
days  after  such  publication  and  after  personal  demand  for  payment 
shall  have  been  made,  neglect  or  refuse  to  pay  the  sum  so  assessed 
upon  him,  the  directors  may  sue  for  and  recover  the  whole 
amount  of  his  note  or  notes,  with  costs  of  suit,  but  execution  shall 
only  issue  for  assessments  and  costs  as  they  accrue,  and  every  such 
execution  shall  be  accompanied  by  a  list  of  the  losses  for  which  the 
assessment  is  made. 

If  the  whole  amount  of  notes  shall  be  insufficient  to  pay  the  loss 
occasioned  by  any  fire  or  fires,  in  such  case  the  sufferers  insured  by 
the  corporation  shall  receive,  toward  making  good  tlieir  respective 
losses,  a  proportional  share  of  the  whole  amount  of  such  notes  ac- 
cording to  the  sums  by  them  respectively  insured.  No  member 
shall  ever  be  required  to  pay  for  any  loss  occasioned  by  fire  or  in- 
land navigation  more  than  the  whole  amount  of  his  note.     Any 


§  116.  Fire  Insurance  Corporation.  223 

such  corporation  may  receive  from  any  person  applying  for  insur- 
ance, in  lieu  of  a  deposit  note,  the  whole  amount  in  cash  for  the 
premium  therefor,  ^^'ithout  subjecting  such  person  to  any  other  or 
additional  liability,  or  in  any  way  impairing  or  changing  the  obli- 
gation of  the  corporation  oi  affecting  the  rights  of  any  person  in 
terested  therein. 

Source. — Former  §  116;  originally  revised  from  L.  1853,  chap.  466,  §  13,  as 
amended  by  L.  1854,  chap.  369;  L.  1890,  chap.  302. 

OBLIGATION  OF  MEMBER.— The  obligation  imposed  by  the  statute 
upon  a  member  is  merely  that  he  shall  pay  his  pro  rata  share  of  any  losses, 
and  he  does  not  indemnify  the  insured  against  a  deficiency  arising  out  of 
the  insolvency  of  a  member,  nor  does  he  incur  any  obligation  to  pay  the 
proportion  of  any  other  member  who  has  become  insolvent,  or  who  is,  from 
any  cause,  unable  to  pay  his  proportionate  share  of  the  loss.  Pratt  v 
Dwelling  House  Mut.  Co.,  7  App.  Div.,  544. 

A  member  of  a  mutual  company  is  liable  upon  his  deposit  note  for  losses 
in  the  proportion  which  the  amount  of  his  note  bears  to  the  aggregate  of 
deposit  notes  which  are  collectible  and  legally  subject  to  assessments  for 
such  losses.    Bangs  v.  Gray,  12  N.  Y.,  477. 

One  insured  in  a  mutual  company  continues  liable  to  assessment  upon  his 
premium  note  for  any  losses  incurred  during  the  terra  specified  in  his  policy, 
although  his  property  insured  be  destroyed  long  previous  to  its  expiration 
Bangs  V.  Skidmore,  21  N.  Y.,  136. 

Notwithstanding  that  a  policy  be  regarded  as  absolutely  void  by  reason 
of  an  unauthorized  assignment,  the  assured  is  not  released  from  the  obli 
gations  of  his  deposit  or  premium  note  until  all  assessments  are  paid 
Hyatt  V.  Wait,  37  Barb.,  29. 

Besides  his  indebtedness  for  the  amount  of  an  assessment  already  made, 
the  maker  of  a  premium  note  is  also  liable  to  pay  his  just  proportion  of 
the  losses  of  the  company  occurring  while  his  policy  is  in  force,  for  which 
no  assessment  has  yet  been  made.    Sands  v.  Hill,  42  Barb.,  651. 

ASSESSMENT. —  The  fact  that  an  assessment  made  upon  a  premium  note 
includes  ten  per  cent  for  expenses,  besides  losses,  does  not  render  the  assess- 
ment irregular  and  void.     Hyatt  v.  Esmond,  37  Barb.,  601. 

The  assessment  of  a  premium  note  is  but  the  performance  of  a  ministerial 
duty,  and  is  therefore  not  final;  the  fact  that  an  assessment  has  already  been 
made  upon  a  premium  note,  which  still  remains  unenforced,  will  not  render 
a  second  assessment  upon  the  note,  embracing  the  former  one,  and  designed 
to  accomplish  the  same  purpose,  invalid.     Sands  v.  Sweet,  44  Barb.,  108. 

The  power  of  the  receiver  of  a  mutual  fire  insurance  company  to  levy  an 
assessment  upon  the  makers  of  capital  stock  notes,  to  meet  the  company's 
liabilities,  is  not  judicial  in  its  n.ature,  and  can  be  exercised  only  where  thfc 
circumstances  render  it  necessary  and  proper.  Kaegener  v.  Willard,  44  App. 
Div.,  41. 


224  The  Insueance  Law.  §  116. 

The  directors  of  a  mutual  insurance  company  do  not  act  judicially  in 
making  assessments  upon  premium  notes;  the  directors  have  no  right  to  take 
into  consideration  the  length  of  time  any  person  has  been  a  member,  in 
determining  the  amount  of  his  assessment,  or  whether  he  shall  be  assessed 
at  all.     Herkimer  Co.  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.,  373;  7  How.  Pr.,  210. 

An  assessment  is  a  necessary  condition  to  the  maintenance  of  an  action 
by  the  receiver  of  a  mutual  insurance  company  upon  a  premium  note,  where 
the  charter  and  by-laws  do  not  otherwise  provide.  Savage  v.  Medbury,  19 
N.  Y.,  32. 

A  general  assessment,  and  notice  that  each  premium  note  of  every  class 
is  assessed  for  the  full  amount  thereof,  is  sufficient  where  the  losses  in  the 
class  to  which  the  note  belonged  exceed  the  amount  of  all  the  notes  received 
upon  that  class  of  risks,  and  the  losses  of  the  company  exceed  what  is  col- 
lectible on  all  the  notes  of  all  classes  and  dates;  it  is  unnecessary  that  the 
Assessment  should  state  the  particulars  of  the  assets  and  debts  upon  which 
it  is  founded.     Sands  v.  Sanders,  26  N.  Y.,  239. 

NON- ASSESSABLE  POLICY.— A  mutual  company  may  issue  a  non- 
assessable policy  for  cash  and  the  insured  may  recover  thereon  against  a  per- 
manent receiver  of  the  company  for  a  loss  which  occui'red  after  the 
appointment  of  a  temporary  receiver.  People  v.  Highland  Mut.  Co.,  26 
Misc.,  205. 

All  parties  insured  are  members  of  the  corporation  and  entitled  to  share 
in  its  profits  of  its  business;  the  contingent  benefit  thus  secured  by  taking 
out  a  policy  for  a  cash  premium  is  sufficient  to  constitute  the  insured  an 
insurer  to  the  extent  of  his  interest,  and  to  bring  the  transaction  within 
the  principle  of  mutuality.    Mygatt  v.  N.  Y.  Prot.  Ins.  Co.,  21  N.  Y.,  52. 

Holders  of  policies  in  a  mutual  fire  insurance  company,  who  have  paid 
a  certain  definite  sum  of  money  in  full  for  insurance  therein,  in  lieu  and  in 
place  of  a  premium  note  therefor,  are  as  fully  and  eflFectively  insured  as  those 
who  have  given  a  premium  note  for  insurance,  and  are  members  of  the  com- 
pany and  entitled  to  vote  at  any  election  of  its  directors  equally  with  note 
policyholders.    Matter  of  Mut.  Fire  Ins.  Co.,  164  N.  Y.,  10. 

INSUFFICIENT  NOTICE.— Where  the  notice  of  assessment  specified  dif- 
ferent rates  of  assessment  for  "  small  notes "  and  "  large  notes,"  without 
showing  in  any  manner  how  a  given  note  was  distinguishable  as  belonging 
to  one  or  the  other  class,  and  there  was  no  evidence  of  any  rule  on  the 
subject  contained  in  the  charter  or  by-laws,  the  notice  was  held  inoperative 
for  uncertainty.    Bangs  v.  Duckinfield,  18  N.  Y.,  592. 

The  notice  of  assessment  should  state  the  amount  which  each  member  is 
to  pay;  otherwise  it  will  be  insufficient  and  defective,  and  will  not  oblige  the 
members  to  pay,  or  subject  them  to  a  suit  upon  the  premium  note.  Bangs 
V.  Mcintosh,  23  Barb.,  691. 

Where  the  by-laws  of  the  company  require  a  notice  of  the  assessment  to 
be  published,  unless  such  publication  is  shown  a  failure  to  pay  an  assess- 
ment is  unavailable  as  a  defense  to  an  action  on  a  policy.  Bodle  v.  Chenango 
Co.  Mut.  Ins.  Co.,  2  N.  Y.,  63. 


§  116.        Fire  Insurance  Coepoeation.         225 

The  publication  in  the  absence  of  by-laws  is  to  be  made  according  to  the 
discretion  of  the  directors;  but  where  by-laws  prescribe  the  method  of  publi- 
cation their  directions  must  be  followed,  and  a  defect  therein  is  not  aided 
by  proof  of  a  personal  demand.  Sands  v.  Shoemaker,  4  Abb.  Ct.  of  App., 
149;  2  Keyes,  268. 

The  publishing  of  the  notic?  is  not  merely  directory,  and  personal  notice 
to  a  party  assessed  is  not  equivalent  to,  nor  does  it  dispense  with  publica- 
tion.    Sands  v.  Groves,  58  N.  Y.,  94. 

COUNTERCLAIM. —  A  member  of  a  mutual  marine  insurance  company 
cannot,  upon  its  insolvency,  set  off  against  his  indebtedness  for  premiums 
due  upon  policies  a  loss  sustained  by  him,  adjusted  and  payable  by  the 
company.    Laurence  v.  Nelson,  21  N.  Y.,  158. 

ACTION  ON  NOTE. —  In  an  action  upon  a  premium  note  is  it  unnecessary 
to  show  the  particular  loss  for  the  payment  of  which  the  assessment  is 
made.     Jackson  v.  Roberts,  31  N.  Y.,  304. 

The  premium  notes  given  to  and  held  by  a  mutual  insurance  company  are 
liable  to  pay  losses  arising  under  cash  policies  issued  by  the  company.  White 
V.  Havens,  20  How.  Pr.,  177. 

DISCRIMINATION. —  In  making  an  assessment  no  discrimination  is  to  be 
made  between  notes  given  when  higher  rates  of  insurance  existed  and  those 
under  reduced  rates.    Shaughnessy  v.  Rensselaer  Ins.  Co.,  21  Barb.,  605. 

RECEIVER. —  A  receiver,  in  making  an  assessment  upon  premium  notes 
held  by  the  company,  is  the  actor,  and  his  authority  depends,  not  upon  the 
order  of  the  court,  but  upon  the  existence  of  facts  rendering  an  assessment 
necessary  and  proper.    Thomas  v.  Whallon,  31  Barb.,  172. 

INTEREST.— A  personal  demand  of  the  amount  assessed  upon  a  premium 
note  must  be  made  before  an  action  can  be  brought  against  the  maker; 
upon  a  recovery  on  such  a  note,  for  the  non-payment  of  assessments,  the 
plaintiff  is  entitled  to  interest  from  the  time  when  the  assessments  became 
payable.     Sands  v.  Annesley,  66  Barb.,  598. 

In  an  action  to  recover  an  assessment  on  a  premium  note  given  on  effecting 
an  insurance,  the  plaintiff  is  not  entitled  to  interest  on  the  amount  of  the 
note.     Bangs  v.  Bailey,  37  Barb.,  630. 

REVIVAL  OF  POLICY. —  In  an  action  on  a  policy  issued  by  a  mutual  com- 
pany it  appeared  that  the  company,  with  full  knowledge  that  the  policy 
had  become  void  by  an  alienation  of  the  property  insured,  assessed  the 
plaintiff's  premium  note  on  account  of  losses  which  occurred  after  the  aliena- 
tion, and  collected  the  assessment;  held,  that  this  did  not  revive  the  policy, 
but  was  consistent  with  the  right  of  the  company  to  treat  it  as  void.  Neely 
v.  Onondaga  Co.  Mut.  Ins.  Co.,  7  Hill,  49. 

When  a  policy  has  become  void  by  reason  of  an  unlawful  assignment  it 
will  not  be  revived  because  the  company,  with  full  knowledge,  assessed 
the  assured  for  losses.    Smith  v.  Saratoga  Co.  Mut.  Fire  Ins.  Co.,  3  Hill,  508. 

FORCE  OF  ADJUSTMENT.— The  amount  to  be  paid  by  the  insured,  if 
anything,  toward  previous  losses  on  a  surrender  of  a  deposit  note  is  a  subject 


226  The  Insubance  Law.  §  IIY. 

of  adjustment  between  him  and  the  company,  and  when  the  adjustment  is 
made  and  the  policy  and  note  are  surrendered  the  settlement  is  binding  un- 
less impeached  on  the  ground  of  fraud  or  mistake.    Hyde  v.  Lynde,  4  N.  Y.,  387. 

TERMINATION  OF  CHARTER.— The  fact  that  a  charter  of  an  insurance 
company  expires,  by  its  own  limitation,  within  the  period  during  which  a 
policy  is  by  its  terms  to  continue  will  not  avoid  the  policy,  and  discharge 
the  insured  from  his  liability  upon  his  premium  note;  the  policy  is  valid 
for  the  unexpired  term  of  the  charter.     Huntley  v.  Beecher,  30  Barb.,  580. 

EXECUTION. —  In  an  action  on  a  premium  note  a  recovery  may  be  had 
for  its  full  amount  although  that  exceeds  the  assessment  levied  against  it, 
but  execution  can  only  issue  for  the  amount  due  thereon.  Taylor  v.  Port 
Jefferson  Mill.  Co.,  84  Hun,  610;  32  N.  Y.  Supp.,  307;  65  St.  Rep.,  542. 

§  117.    How  surplus  profits  to  be  estimated. 

In  estimating  the  surplus  profits  of  a  fire  insurance  corporation 
for  the  purpose  of  making  any  dividend  upon  its  capital  stock, 
there  shall  be  reserved  from  such  profits  a  sum  equal  to  the 
amount  of  all  unearned  premiums  on  unexpired  risks  and  policies, 
and  all  sums  due  the  corporation  on  bonds  and  mortgages,  bonds, 
stocks  and  book  accounts,  of  which  no  part  of  the  principal  or  in- 
terest thereon  has  been  paid  during  the  last  year,  and  for  which 
foreclosure  or  suit  has  not  been  commenced  for  collection  or  which, 
after  judgment  obtained  thereon,  shall  have  remained  more  than 
two  years  unsatisfied,  and  on  which  interest  skall  not  have  been 
paid,  and  all  interest  due  or  accrued  and  remaining  unpaid.  But 
no  corporation  may  declare  dividends  exceeding  ten  per  centum 
on  its  capital  stock  in  any  one  year  unless,  in  addition  to  the 
amount  of  its  capital  stock  such  dividend,  all  outstanding  liabilities 
and  the  amount  of  all  unearned  premiums  on  unexpired  risks  and 
policies  as  aforesaid,  it  shall  have  and  be  in  possession  of  surplus 
profits  to  an  amount  equalling  thirty  per  centum  of  its  unearned 
premiums. 

Any  dividend  made  contrary  to  the  provisions  of  this  section 
shall  work  a  forfeiture  of  the  charter  of  the  corporation,  and  each 
stockholder  receiving  any  such  dividend  shall  be  liable  to  the  cred- 
itors of  the  corporation  to  the  extent  of  the  dividend  received  in 
addition  to  the  other  penalties  and  punishments  prescribed  by  law. 
This  section  shall  not  apply  to  the  declaration  of  scrip  dividends  by 
participating  corporations.  No  siich  scrip  dividends  shall  be  paid 
except  from  the  surplus  profits,  after  reserving  all  sums  as  abovo 


§  118.  Fire  Insurance  Corporation.  227 

provided,  including  the  whole  amount  of  unearned  premiums  on 
unexpired  risks.  And  whenever  any  fire  insurance  corporation 
shall  have  accumulated  and  be  in  possession  of  a  fund  in  addition  to 
the  amount  of  its  capital  stock,  and  all  actual  outstanding  liabilities 
in  excess  of  one-half  of  the  amount  of  all  premiums  on  risks  not 
not  terminated  such  corporation  may  increase  its  capital  stock  from 
such  fund  ;  and  distribute  such  increase  pro  rata  to  the  stockhold- 
ers of  such  corporation,  provided,  always,  that  such  increase  shall 
be  equal  to  at  least  twenty-five  ])er  centum  of  the  original  capital 
stock  of  said  corporation  and  shall  have  been  approved  by  the  su- 
perintendent of  the  insurance  department  and  authorized  by  at 
least  three-fourths  of  the  board  of  directors  of  such  corporation, 
and  provided,  also,  that  any  such  corporation  may  hereafter  make 
and  declare  a  dividend  as  provided  by  this  chapter. 

Source. — Former  §  117,  as  amended  by  L.  1905,  chap.  251;  originally  revised 
from  L.  1853,  chap.  466,  §  12,  as  amended  by  L.  1867,  chap.  91. 

See  §  28,  Stock  Corporation  Law,  chap.  61  of  1909.  Liability  of  directors 
for  making  unauthorized  dividends 

See  §  664,  Penal  Law.  Misconduct  of  directors  in  making  dividend  except 
from  surplus  profits. 

DIVIDENDS. —  Dividends  upon  the  capital  stock  of  a  fire  insurance  cor- 
poration can  only  be  paid  from  surplus  earnings.  Attorney-General  Rep.. 
1894,  page  212. 

Section  117  of  the  Insurance  Law  does  not  prohibit  all  insurance  companies 
from  declaring  dividends  exceeding  ten  per  centum.  Attorney-General  Rep., 
1901,  page  148. 

Where  the  capital  of  a  fire  insurance  company  is  impaired,  all  dividends 
paid  stockholders,  except  those  declared  from  surplus  profits,  must  be  returned 
by  the  directors.     Attorney-General  Rep.,  June  25,  1895. 

The  provision  of  this  section  declaring,  in  effect,  that  moneys  received  for 
premiums  upon  unexpired  fire  insurance  policies  shall  not  be  deemed  sinrplus 
profits,  but  shall  be  considered  as  "  unearned  premiums  "  in  making  dividends, 
does  not  affect  the  status  of  such  receipts,  as  property,  for  the  purposes  of 
taxation,  and  in  no  way  interferes  with  or  aflfects  the  statute  in  relation  to 
taxation.    People  ex  rel.  M.  F.  Ins.  Co.  v.  Commissioners,  76  N.  Y.,  64. 

§  118.  Allowance  of  assets  and  estimation  of  liabilities  upon 
examinations. 

When  an  examination  is  made  by  the  authority  of  the  superin- 
tendent of  insurance  into  the  affairs  of  any  fire  insurance  cor- 
poration doing  business  in  this  state,  or  when  such  corporation 


228  The  Insukance  Law.  §   119. 

renders  a  statement  to  the  insurance  department,  there  shall  not 
be  allowed  as  assets  any  investments  which  are  not  held  as  pre- 
scribed by  law  at  the  date  of  such  examination  or  rendering  such 
statement;  but  unpaid  premiums  on  policies  written  within  three 
months  shall  be  admitted  as  available  resources.  In  estimating 
its  liabilities,  there  shall  be  charged,  in  addition  to  the  capital  stock 
and  all  outstanding  claims,  a  sum  equal  to  the  total  unearned  pre- 
miums on  the  policies  in  force,  calculated  on  the  gross  sum  with- 
out any  deduction  on  any  account,  charged  to  the  policyholder  on 
each  respective  risk  from  the  date  of  the  issue  of  the  policy.  In 
the  case  of  an  examination  into  the  condition  of  any  mutual  fire 
insurance  corporation  with  capital  stock  notes,  the  value  of  such 
notes  shall  be  ascertained  and  the  responsibility  of  the  makers 
thereof  certified  to  in  the  same  manner  as  is  required  by  section 
one  hundred  and  eleven  of  this  chapter. 

Source. — Former  §  118,  as  amended  by  L.  1898,  chap.  465  j  originally  revised 
from  L.  1880,  chap.  110,  §  1. 

See  §   130,  post.    Guaranty  and  special  reserve  funds. 

VALUATION  OF  POLICIES.— The  superintendent  of  insurance,  in  making 
a  valuation  of  the  policies  of  a  foreign  fire  insurance  company,  should  value 
only  such  policies  as  are  issued  by  said  company  and  are  outstanding  and 
in  force  in  this  country.    Attorney-General  Rep.,  1893,  page  417. 

CONTESrUANC-E  IN  BUSINESS.— The  question  as  to  the  continuance  in 
business  of  a  mutual  insurance  company  is  to  be  determined  by  the  super- 
intendent under  §  43  of  the  Insurance  Law,  and  §  118  applies  only  in  part 
to  a  mutual  insurance  company.  People  ex  rel.  Long  Island  Mut.  v.  Payn,  26 
App.  Div.,  584;  50  N.  Y.  Supp.,  334. 

,/ 

§  119.    Liability  of  directors  and  corporators. 

The  directors  and  corporators  of  any  corporation  organized 
under  this  article,  and  those  entitled  to  a  participation  of  the 
profits  of  such  corporation,  shall  be  jointly  and  severally  liable 
for  all  debts  or  liabilities  of  such  corporation,  until  the  whole 
amount  of  the  capital  of  the  corporation  shall  have  been  paid  in 
in  cash,  and  a  certificate  has  been  issued  to  it  by  the  superintendent 
authorizing  it  to  do  business  in  this  state. 

Source.— Former  §  119;  originally  revised  from  L.  1853,  chap.  466,  §  17. 

DIRECTOR. —  It  seems  that  a  director  of  a  fire  insurance  company  has  no 
right  to  approve  of  his  own  application.  Pratt  v,  D.  H.  M.  F.  Ins.  Co.,  130 
N.  Y.,  206. 


§§  120,  121.      FiKE  Insurance  Corporation.      229 

CORPORATIONS. —  Corporators,  as  used  in  this  section,  does  not  include 
stockholders;  corporators  are  the  associates  engaged  in  organizing  the  com- 
pany, whose  functions  cease  with  its  organization,  then  stockholders  come 
in;  after  their  functions  thus  cease  the  corporators  cannot  be  further  held 
liable;  where  a  corporator  is  liable  under  this  section  the  cause  of  action, 
upon  his  death,  survives  against  his  estate.     Chase  v.  Lord,  77  N.  Y.,  1. 

§  120.    What  to  appear  on  face  of  policy. 

Every  domestic  mutual  fire  insurance  corporation  shall  embody 
the  word  "  mutual "  in  its  title,  which  shall  appear  on  the  first 
page  of  every  policy  and  renewal  receipt.  Every  fire  insurance 
corporation  doing  business  as  a  cash  stock  corporation  shall  upon 
the  face  of  its  policy  in  some  suitable  manner  express  that  such 
policy  is  a  policy  in  a  stock  corporation. 

Source. — Former  §  120;   originally  revised  from  L.  1853,  chap.  466,  §  15. 

§  121.  Standard  fire  insurance  policy  to  be  prescribed  and 
used. 

The  printed  blank  form  of  a  contract  or  policy  of  fire  insurance, 
with  such  provisions,  agreements  or  conditions  as  may  be  indorsed 
thereon  or  added  thereto  and  form  a  part  of  such  contract  or  policy, 
heretofore  filed  in  the  office  of  the  secretary  of  state  by  the  super- 
intendent of  insurance  or  by  the  New  York  board  of  fire  under- 
writers pursuant  to  the  provisions  of  chapter  four  hundred  and 
eighty-eight  of  the  laws  of  eighteen  hundred  and  eighty-six  shall 
be  transferred  by  the  secretary  of  state  to  the  office  of  the  superin- 
tendent of  insurance  and,  together  with  such  provisions,  agree- 
ments or  conditions  as  may  be  filed  by  the  'New  York  board 
of  fire  underwriters  in  the  office  of  the  superintendent  of  insur- 
ance and  approved  by  him,  which  provisions,  agreements  or  condi- 
tions shall  be  void  if  they  are  inconsistent  with  the  standard  fire 
insurance  policy  heretofore  filed  in  the  office  of  the  secretary  of 
state,  shall  be  known  and  designated  as  the  "  standard  fire  insurance 
policy  of  the  state  of  New  York."  No  fire  insurance  corporation, 
its  officers  or  agents,  shall  make,  issue,  or  deliver  for  use,  any  fire 
insurance  policy  or  the  renewal  of  any  such  policy  on  property  in 
this  state,  other  than  such  as  shall  conform  in  all  particulars  as  to 
blanks,  size  of  type,  context,  provisions,  agreements  and  conditions 
with  such  printed  blank  form  of  contract  or  policy;  and  no  other 


230  The  Insurance  Law.  §  121. 

or  different  provision,  agreement,  condition  or  clause  shall  be  in 
any  manner  made  a  part  of  such  contract  or  policy  or  indorsed 
thereon  or  delivered  therewith,  except  as  follows,  to  wit : 

First.  The  name  of  the  corporation,  its  location  and  place  of 
business,  date  of  its  incorporation  or  organization,  whether  it  is  a 
stock  or  mutual  corporation,  the  names  of  its  officers,  the  number 
and  date  of  the  policy,  and  if  issued  through  a  manager  or  agent 
the  words  "  this  policy  shall  not  be  valid  until  countersigned  by  the 
duly  authorized  manager  or  agent  of  the  corporation  at " 

Second.  Printed  or  written  forms  of  description  and  specifica- 
tion, or  schedules  of  the  property  covered  by  any  particular  policy, 
and  any  other  matter  necessary  to  clearly  express  all  tlie  facts  and 
conditions  of  insurance  on  any  particular  risk  not  inconsistent  with 
or  a  waiver  of  any  of  the  conditions  or  provisions  of  the  standard 
policy  herein  provided  for. 

Third.  With  the  approval  of  the  superintendent  of  insurance,  if 
the  same  is  not  already  included  in  such  standard  form,  any  pro- 
vision which  any  such  corporation  is  required  by  law  to  insert  in  its 
policies,  not  in  conflict  with  the  provisions  of  such  standard  form. 
Such  provisions  shall  be  printed  apart  from  the  other  provisions, 
agreements  or  conditions  of  the  policy  under  a  separate  title  as 
follows :   "  Provisions  required  by  law  to  be  stated  in  this  policy." 

After  the  first  day  of  January,  1911,  such  policy  or  contract 
may  be  printed,  written  or  typewritten  with  any  size  of  type  or  on 
any  size  or  shape  of  paper  which  shall  have  the  written  approval 
of  the  superintendent  of  insurance. 

The  name,  with  the  word  '^  agent  "  or  ^'  agents,"  and  place  of 
business,  of  any  insurance  agent  or  agents,  either  by  writing,  print- 
ing, stampirg  or  otherwise,  may  be  indorsed  on  the  outside  of  such 
policies. 

Two  or  more  fire  insurance  corporations,  authorized  to  transact 
business  in  this  state,  may  issue  a  combination  standard  fonrt  of 
policy,  using  a  distinctive  title  therefor,  which  title  shall  appear 
at  the  head  of  such  policy  followed  by  the  titles  of  the  several 
corporations  obligated  thereupon,  and  which  policy  shall  be  exe- 
cuted by  the  ofiicers  of  each  of  such  corporations;  provided,  that 


§   151.  Fire  Insurance  Corporation.  231 

before  such  corporation  shall  issue  such  combination  policy,  they 
shall  have  received  the  express  permission  of  the  superintendent  of 
insurance  to  issue  the  same,  and  the  title  of  such  proposed  policy 
and  the  terms  of  the  additional  provisions  thereof,  hereby  author- 
ized, shall  have  been  approved  by  him,  which  terms,  in  addition  to 
the  provisions  of  the  standard  policy  and  not  inconsistent  there- 
with, shall  provide  substantially  under  a  separate  title  therein,  to 
be  known  as  "  Provisions  specially  applicable  to  this  combination 
policy,''  as  follows:  (a)  That  each  corporation  executing  such 
policy  shall  be  liable  for  the  full  amount  of  any  loss  or  damage, 
according  to  the  terms  of  the  policy,  or  a  specific  percentage 
thereof ;  (b)  that  service  of  process,  or  of  any  notices  required  by 
the  said  policy,  upon  any  of  the  corporations  executing  the  same 
shall  be  deemed  to  be  service  upon  all ;  and  provided,  further,  that 
the  unearned  premium  liability  on  each  policy  so  issued  shall  be 
maintained  bj  each  of  such  corporations  on  the  basis  of  the  liability 
of  each  to  the  insured  thereunder. 

Source.— Former  §  121,  as  amended  by  L.  1901,  chap.  513;  L.  1903,  chap.  106; 
originally  revised  from  L.  1886,  chap.  488,  §§  1,  2,  4,  as  amended  by  L.  1887, 
chap.  429. 

Amended  by  L.  1909,  chap.  240;  L.  1910,  chaps.  168,  638  and  668,  and  L.  1913, 
chap.  181.    In  effect  June  30,  1913. 

Note. — The  purpose  of  the  amendment  of  section  121  and  addition  of  sec- 
tion 121-a  by  chapter  191  of  1913  was  to  require  after  June  30,  1913,  every 
fire  insurance  policy  to  have  a  notice  attached  to  it  providing  for  appeal,  and 
also  to  allow  the  New  York  Board  of  Fire  Underwriters  to  submit  to  the 
superintendent  new  riders  w'hich  if  approved  can  be  used  in  connection  with 
the  standard  fire  policy. — Ed. 

Note. —  The  Lloyds  bill  —  chap.  638  of  1910 — ^and  the  combination  standard 
fire  policy  bill  —  chap.  668  of  1910  —  both  amend  §  121.  The  amendment,  as 
found  in  the  latter  bill,  is  the  more  comprehensive  and  is  in  accordance  with 
the  Department's  desires.  The  Lloyds  bill  was  signed  June  24th,  and  the  com- 
bination standard  fire  policy  bill  June  25th.  Though  both  statutes  go  into 
effect  on  the  same  day,  the  intent  of  the  legislature  and  the  Executive  will 
doubtless  be  determined  by  these  dates.  The  section  is  here  printed  as 
amended  by  chap.  668  of  1910.— Editor. 

Laws  1903,  chapter  106,  section  1,  by  its  terms  purported  to  amend  section 
190  of  Laws  1892,  chapter  690.  This  was  an  error,  as  there  was  no  section  190 
in  the  latter  act.  The  substance  of  the  amending  act  shows  clearly  that  it 
was  intended  to  amend  section  121. 

See  §  1193,  Penal  Law.  Fire  insurance  corporations  to  use  standard 
policy  only. 


232  The  Insurance  Law.  §  121. 

VERBAL  CONTRACT. —  Where  a  local  agent  of  a  fire  insurance  company, 
after  a  conversation  with  an  applicant  for  fire  insurance  in  which  the  sum 
for  which  the  property  was  to  be  insured,  the  premium  and  the  period  of 
insurance  were  discussed  and  fixed,  stated  to  the  applicant  that  "  You  are 
insured  from  noon  of  the  30th  day  of  December,  1893,  to  noon  of  December 
30,  1894,"  a  complete  and  binding  contract  for  insurance  for  the  period  stated 
is  created,  and  the  law  reads  into  the  contract  the  standard  fire  insurance 
policy  of  the  state  of  New  York,  whether  it  was  referred  to  in  terms  or  not. 
Hicks  V.  British  Am.  Assur.  Co.,  162  N.  Y.,  284. 

CONTRACTUAL  LIMITATION.— The  contractual  limitation  is  a  part  of 
the  standard  form  of  insurance  policies  issued  in  this  state  pursuant  to 
statute,  and  unless  the  defendant  has  waived  the  limitation  or  it  is  estopped 
from  asserting  the  same  it  is  a  complete  defense  to  an  action;  an  insurance 
company  may  waive  the  limitation  or  estop  itself  from  asserting  it.  McArdle 
V.  German  All.  Ins.  Co.,  98  App.  Div.,  594. 

INDORSEMENT. —  The  standard  form  cannot  properly  contain  or  bear  upou 
its  face  an  indorsement  in  the  form  of  an  agreement  signed  by  the  agent 
undertaking  to  relieve  the  assured  from  any  and  all  assessments  which  may 
be  made  by  the  company  against  the  assured  under  said  policy.  In  re 
Mutual  Fire  Ins.   Co.,  Attorney-General  Rep.,    1902,  page   234. 

The  indorsement  upon  or  delivery  with  a  standard  fire  insurance  policy 
of  a  notice  to  the  effect  that  unless  the  premium  is  paid  on  or  before  a 
specified  date,  the  company  will  exercise  its  rights  of  cancellation  as  pro 
Tided  by  the  policy,  is  not  a  violation  of  the  provisions  of  §  121  of  the 
Insurance  Law  or  of  §  57 7d  of  the  Penal  Code.  In  re  Clinton,  Attorney 
General  Rep.,  1902,  page  241. 

DEPOSIT  OF  PROOFS.— Depositing  proofs  of  loss  by  fire  in  the  post-oflace 
sixty  days  after  the  fire,  which  proofs  are  not  received  by  the  compan}' 
until  the  sixty- second  day,  is  not  a  compliance  with  the  conditions  of  a 
policy  requiring  that  the  insured  shall  render  a  statement  to  the  attorneys 
of  underwriters  within  sixty  days.    Peabody  v.  Satterlee,  166  N.  Y.,  174. 

There  is  a  suflBcient  compliance  with  the  provisions  of  a  fire  insurance  policy 
requiring  the  insured  to  give  the  insure-  "  immediate  "  notice  of  a  loss  if  the 
insured,  using  due  diligence,  serves  the  notice  within  a  time  which  is  reason- 
able under  the  circumstances;  the  question  of  due  diligence  under  the  circum- 
stances of  the  case  is  for  the  jury.  Will  &  Baumer  Co.  v.  Rochester  German 
Insurance  Co.,  140  App.  Div.,  691. 

CHANGE  OF  INTEREST.— Where  a  policy  contained  a  condition  declar 
ing  it  void  in  case  of  any  change  of  interest,  title  or  possession,  whether 
by  legal  process  or  voluntary  act,  the  issuing  of  an  execution  and  a  levy 
thereunder  does  not  work  a  change  of  interest  within  the  meaning  of  the 
policy.    Walradt  v.  Phoenix  Ins.  Co.,  136  N.  Y.,  375. 

NON- OCCUPANCY. —  Permit    for    non-occupancy    limiting    company's    lia 
bility  to  two-thirds  of  the  amount  insured  in  the  policy,  etc.,  not  "  incon- 
sistent with "  nor  "  a  waiver  of  any  of  the  conditions  or  provisions  of  the 
standard  policy."     Attorney-General  Rep.,  1903,  page  281. 

COLD  STORAGE  RIDERS.— §  121  prohibits  the  making  of  a  policj 
which  would  insure  against  indirect  loss  or  consequential  damages ;  "  cold 
storage"  riders  are  not  permissible.    Attorney-General  Rep.,  1902,  page  351. 


§  121.       Fire  Insurance  Corporation.  233 

A  rider  attached  to  a  policy  of  insurance,  stating  that  it  is  issued  upon 
the  understanding  and  warranty  by  the  insured  that  another  certain  company 
has  a  policy  in  force  insuring  the  identical  property  in  identically  the  same 
proportions  and  at  no  higher  rate  of  premium  is  within  the  second  exception 
of  section  121;  where  the  policy  referred  to  in  the  rider  was  in  fact  written 
at  a  higher  rate  of  premium  and  the  proportions  were  not  identical,  the 
policy  to  which  the  rider  is  attacihed  is  void  for  the  breach  of  the  warranty; 
an  insurance  broker,  procuring  the  policy  to  which  the  rider  it  attached,  is 
liable  to  the  insured  where  its  invalidity  arose  from  his  negligence.  Scharles 
V.  N.  Hubbard,  Jr.  &  Co.,  74  Misc.,  72. 

BINDING  SLIP. —  Where  defendant,  in  order  to  provide  temporary  insur- 
ance pending  an  inquiry  as  to  the  character  of  the  risk,  delivered  to  plain 
tiff  a  "  binding  slip,"  containing  none  of  the  conditions  found  in  the  policies, 
the  plaintiff  was  not  entitled  to  recover  when  the  loss  occurred  two  hours 
after  plaintiff  had  been  notified  that  defendant  would  not  accept  the  riskj 
the  contract  evidenced  by  the  "  binding  slip "  was  one  subject  to  the  con- 
ditions contained  in  an  ordinary  policy,  and  the  notice  terminated  the  con- 
tract pursuant  to  such  a  condition  in  the  policy.  Lipman  v.  N.  F.  Ins.  Co.. 
121  N.  Y.,  454. 

When  a  fire  insurance  company  signs  and  delivers  to  an  insurance  broker 
employed  to  procure  insurance  what  is  known  as  a  "  binding  slip,"  agreeing 
to  make  the  insurance,  the  slip  to  be  binding  until  a  regular  policy  is  made 
out  and  delivered,  the  contract  evidenced  by  the  slip  is  the  ordinary  policy 
issued  by  the  company.     Karelsen  v.  Sun  Fire  Off.,  122  N.  Y.,  545. 

It  is  proper  to  issue  a  binder  for  temporary  insurance  pending  an  inquiry 
by  the  company  as  to  the  character  of  the  risk  or  during  any  delay  in 
issuing  the  policy.  In  re  N.  Y.  Fire  Ins.  Exchange,  Attorney -General  Rep., 
1904,  page  416. 

SURRENDKR  OF  CERTIFICATE.— It  is  not  a  violation  of  the  provisions 
of  §  121  to  issue  a  policy  that  the  applicant  has  insurance  "  Loss,  if  any, 
in  conformity  with  the  conditions  of  said  policy  to  be  adjusted  on  presenta- 
tion and  surrender  of  this  certificate."     Attorney-General  Rep.,  1904,  page  430. 

MORTGAGED  PREMISES.— When,  by  a  policy  of  fire  insurance  issued  to 
the  owner  of  mortgaged  premises,  loss,  if  any,  is  made  payable  to  the  mort- 
gagee, as  his  interest  may  appear,  the  undertaking  so  to  pay  is  collateral 
and  dependent  upon  the  principal  undertaking,  and  if  there  is  a  breach  of 
conditions  in  the  policy  by  the  assured,  which  by  its  terms  renders  it  void, 
».his  defeats  a  recovery  thereon  by  the  mortgagee.  Moore  v.  H.  F.  Ins.  Co., 
141  N.  Y.,  219. 

Adding  to  mortgagee  clause  the  words  "guarantors  of  the  mortgagee," 
immediately  after  the  name  of  beneficiary,  is  allowable  under  §  121  of  the 
Insurance   Law.     Attorney-General   Rep.,    1903,  page   331. 

The   insertion   of   the   words    "  or   any   of   its   assigns "'  in   the  mortgagee 

clause  of  a  standard  fire  insurance  policy  after  the  name  of  the  mortgagee 

is  a  violation  of  the  provisions  of  §   121  of  the  Insurance  Law.  Attorney - 
General  Rep.,   1902,  page  272. 


234  The  Insueance  Law.  §  121-a. 

GASOLINE. —  Certain  permits  for  the  use  and  storage  of  gasoline  may  be 
inserted  in  the  standard  policy  but  it  should  not  be  changed  so  as  to  place 
limitations  on  the  company's  liability.  In  re  Nat.  Bd.  of  Fire  Underwriters, 
Attorney-General  Kep.,  1902,  page  315. 

PRESUMPTION. —  The  court  will  not  presume  that  a  policy  of  insurance 
which  covers  property  in  the  state  of  Missouri  is  a  New  York  standard 
policy.    Loomis  v.  Lewis,  62  App.  Div.,  433. 

A  provision  in  the  standard  form  of  fire  insurance  that  the  insured  shall 
not  be  liable  for  a  greater  proportion  of  any  loss  than  the  amount  insured 
shall  bear  to  the  whole  insurance  covering  the  property,  etc.,  does  not  permit 
the  insurer  to  figure  its  proportion  of  liability  upon  other  insurance  held 
under  a  floating  policy  which  provided  that  it  did  not  cover  merchandise  on 
which  "there  was  any  specific  insurance  except  on  the  excess  of  value  above 
such  specific  insurance  when  it  was  exhausted."  Klotz  Tailoring  Co.  v.  Eastern 
Fire  Ins.  Co.,  116  App.  Div.,  723. 

SAFE  DEPOSIT.— The  provisions  of  section  121  of  the  Insurance  Law 
prohibit  not  only  the  issuance  of  a  policy  insuring  against  loss  by  fire  of 
coupon  bonds  and  other  negotiable  securities,  but  also  the  issuance  of  a  policy 
covering  the  liability  of  a  safe  deposit  and  storage  company  for  loss  thereof 
by  fire.     Attorney-General  Rep.,  February  8,  1912. 

INSPECTION.—  The  words  "  within  sixty  days  after  the  fire  "  as  used  in 
the  standard  fire  insurance  policy  means  within  sixty  days  after  the  fire  has 
terminated  or  abated  to  such  an  extent  that  an  inspection  of  the  damaged 
property  may  be  had;  the  ommission  of  the  venue  from  a  proof  of  loss  may 
be  supplied  by  amendment.  Slocum  v.  Saratoga  &  Washington  Fire  Ins.  Co., 
149  App.  Div.,  867. 

An  addition  to  the  authorized,  mortgagee  clause  which  makes  the  interest 
of  the  mortgagee  "subject  to  no  plea  in  bar  of  its  right  to  recover  *  *  * 
except  loss  by  means  of  invasion,  etc.,"  is  inconsistent  with  the  provisions  of 
the  standard  policy  as  its  effect  would  be  to  make  the  policy  incontestable  for 
any  cause  even  for  willful  concealment,  etc.  Attorney-General  Rep.,  April 
10,    1903. 

§  121-a.    Appointment  of  umpire  by  court. 

When,  in  the  event  of  any  loss  or  damage  to  property  in  this 
state  described  in  any  policy  of  fire  insurance  and  covered  thereby, 
the  ascertainment  of  the  amount  of  any  such  loss  or  damage  is, 
as  provided  in  the  policy,  to  be  determined  by  appraisers,  one 
selected  by  the  company,  the  other  by  the  insured,  and  the  two 
so  chosen  shall  have  failed  or  neglected,  for  a  space  of  ten  days 
after  both  have  been  chosen,  to  agree  upon  and  select  an  umpire, 
it  shall  be  lawful  for  either  the  insured  or  the  company  to  apply 
to  any  court  of  record  in  the  county  in  which  the  property  is  or 
was  located,  on  five  days'  notice  in  writing,  to  the  other  party  of 
his  or  its  intention  so  to  do,  to  appoint  a  competent  and  disinter- 
ested umpire.  Any  such  notice  in  writing,  when  served  by  the 
insured,  may  be  served  upon  any  local  agent  of  the  company; 


§  122.  Fire  Insurance  Corporation,  235 

and  the  said  court  shall,  on  proof  by  affidavit  of  the  failure  or 
neglect  of  the  said  appraisers  to  agree  upon  and  select  an  umpire 
within  the  time  aforesaid,  and  of  the  service  of  notice  aforesaid, 
forthwith  appoint  a  competent  and  disinterested  person  to  act 
as  umpire  in  the  ascertainment  of  the  amount  of  said  loss  or 
damage ;  and  the  acts  of  the  umpire  so  appointed  shall  be  binding 
upon  the  insured  and  the  company  to  the  same  extent  as  if  such 
umpire  had  been  selected  in  the  manner  provided  for  in  said 
policy  of  insurance. 

iSTo  policy  of  fire  insurance  shall  be  hereafter  issued  on  property 
located  in  this  state,  unless  the  foregoing  provisions  of  this  section 
shall  be  printed  on  or  attached  thereto  under  the  following  title: 
"  Provisions  required  by  law  to  be  stated  in  this  policy." 

Added  by  L.  1913,  chap.  181.    In  effect  June  30,  1913. 

Note. — For  purpose  of  addition  of  this  section  see  note  to  §  121,  ante. 

§  122.  Payment  of  return  premiums  on  cancellation  of 
policy. 

Any  corporation,  person,  company  or  association  transacting  the 
business  of  fire  insurance  in  this  state  shall  cancel  any  policy  oi 
insurance  upon  the  request  of  the  insured  or  his  legal  ropreseiit^i- 
tivee,  and  shall  return  to  him  or  to  such  representative  the  amount 
af  premium  paid,  less  the  customary  short  rate  premium  for  the 
expired  time  of  the  full  term  of  which  the  policy  has  been  issued 
or  renewed,  notwithstanding  anything  in  the  policy  to  the  contrary. 
Where  the  laws  of  any  state  permit  corporations  organized  under 
its  laws  to  cancel  policies  of  insurance  upon  different  terms  than 
herein  set  forth,  corporations  organized  under  the  laws  of  this  state 
may  cancel  policies  upon  risks  in  any  such  state  upon  the  same 
terms  as  are  provided  for  corporations  organized  under  its  laws. 

Source.— Former  §  122;  originally  revised  from  L.  1880,  chap.  110,  §  3  as 
amended  by  L.  1886,  diap.  612. 

Where  the  charter  and  by-laws  of  a  mutual  insurance  corporation  excludt 
from  membership  persons  who  effect  insurance  with  it  upon  a  cash  basis, 
a  receive:  may  properly  levy  an  assessment  upon  capital  stock  notes  in 
order  to  pay  back  unearned  premiums  upon  cash  policies  which  have  been 
duly  canceled  under  the  Insurance  Law,  as  the  holders  of  such  policies 
sustain  no  relation  to  the  corporation  other  than  that  of  mere  contractors 
with  it.    Regener  v.  Phillips,  26  Misc.,  311. 

An  insurance  company,  when  cancelling  a  policy  before  maturity,  has  no 
right  to  deduct  anything  from  the  unearned  premium  beyond  what  is 
admissible  under  the  short-rate  system;  and  a  further  deduction,  through 
which  it  seeks  to  get  back  what  it  has  paid  brokers  to  place  the  risk,  is 


236  The  Insueance  Law.  §§   123,  124. 

wholly  unauthorized  and  may  be  recovered  of  the  company  by  an  assignee  of 
the  insured.    McKenna  v.  Fireman's  Ins.  Co.,  30  Misc.,  727. 

The  withdrawal  of  a  policy  before  it  becomes  operative  is  not  a  cancellation 
within  the  meaning  of  the  Insurance  Law  so  as  to  require  notice  to  the  insured. 
Walrath  v.  Hanover  Fire  Insurance  Co.,  139  App.  Div.,  407. 

§  123.  Cancellation  of  policies  by  receiver  and  issue  of  cer- 
tificates of  indebtedness. 

Toe  receiver  of  any  domestic  fire  insurance  corporation,  on  the 
receipt  by  him  of  any  policy  of  the  corporation  in  force,  and  upon 
the  written  request  of  the  policy  holder,  shall  cancel  such  policy 
and  issue  in  lieu  thereof,  a  certificate  of  indebtedness  as  such  re- 
ceiver to  the  policy  holder  for  the  amount  of  the  premium  paid 
less  the  proportion  of  premium  for  the  expired  time  of  the  full 
term  for  which  the  policy  had  been  issued  or  renewed,  and  upon 
the  receipt  of  such  certificate  by  the  policy  holder,  the  policy  shal] 
become  null  and  void,  notwithstanding  anything  in  ttie  policy  tc 
the  contrary.  The  receiver,  in  his  report  of  the  liabilities  of  the 
corporation  to  the  insurance  department,  shall  state  the  total 
amount  of  such  outstanding  certificates  of  indebtedness  not  can- 
celed at  the  date  of  the  report 
Source.— Former  §  123;  originally  revised  from  L.  1880,  chap.  110,  §  4. 

§  124.    Extension  of  joint-stock  corporations. 

Any  existing  domestic  joint^stock  fire  insurance  corporation  and 
any  corporation  organized  under  this  article,  having  a  capital  of  at 
least  two  hundred  thousand  dollars  may,  without  increasing  its 
capital,  at  any  time  within  two  years  previous  to  the  termination 
of  its  charter,  after  giving  notice  at  least  once  a  week  for  six  weeks 
successively  in  a  newspaper  published  in  the  county  where  such 
corporation  is  located  of  such  intention,  and  with  a  declaration 
under  its  corporate  seal,  signed  by  the  president  and  two-thirds 
of  its  directors,  of  their  desire  for  such  extension,  extend  the  term 
of  its  original  charter  for  a  period  of  thirty  years,  by  altering  and 
amending  the  same  so  as  to  accord  with  the  provisions  of  this  ar- 
ticle, and  filing  a  copy  of  such  amended  charter  with  sucli  declara- 
tion in  the  office  of  the  superintendent  of  insurance;  whereupon 
the  same  proceedings  shall  be  had  as  are  required  upon  the  incor- 
poration of  a  corporation  under  this  article. 

Source. — Former  §  124;  originally  revised  from  L.  1853,  chap.  466,  §  18,  as 
amended  by  L.  1862,  chap.  367. 

See  S  37,  General  Corporation  Law,  chap.  28  of  1909.  Extension  of  cor- 
porate existence. 


§  125.       Fire  Insurance  Corporation.  237 

A  fire  insurance  company  may  extend  its  corporate  existence  when  under 
section  124  or  under  section  32,  General  Corporation  Law.  Attorney-General's 
Opinion,  February  1,  1909. 

§  125.    Mutual  may  become  stock  corporations. 

Any  domestic  mutual  fire  insurance  corporation  having  surplus 
assets  aside  from  premium  and  capital  stock  notes  sufficient  to  re- 
insure all  its  outstanding  risks,  may,  providing  the  superinten- 
dent of  insurance  give  his  consent  thereto,  and  the  president  and 
directors  thereof,  by  three-fourths  vote  decide  to  so  do,  so  amend 
the  charter  thereof  as  to  convert  the  same  into  a  stock  corpora- 
tion. Such  amended  charter  shall  specify  the  name  by  which  the 
corporation  has  been  known,  and  also  the  name  by  which  it  desires 
to  be  known  in  the  future,  the  location  of  its  principal  office;  the 
amount  of  its  capital  stock,  and  the  number  of  shares  into  w^hich 
the  same  shall  be  divided,  and  the  par  value  of  each;  but  the 
amount  of  its  capital  stock  shall  not  be  less  than  two  hundred  thou- 
sand dollars.  Directors  and  officers  of  such  corporation  shall  hold 
their  said  positions  respectively  until  the  expiration  of  the  terms 
for  which  they  were  elected.  Their  successors  shall  be  elected 
as  if  said  corporation  had  been  originally  incorporated  as  a  stock 
corporation  in  accordance  with  the  provisions  of  this  chapter. 
When  any  change  shall  have  been  decided  upon  by  three-fourths 
of  the  directors,  and  the  consent  of  the  superintendent  shall  have 
been  given  thereto,  then  the  directors  shall  open  books  of  subscrip- 
tion to  the  capital  stock,  and  give  notice  of  the  change  and  that 
said  books  have  been  opened,  and  that  the  members  of  such  cor- 
poration on  the  day  when  such  changed  charter  or  article?  were 
made  and  filed,  and  the  consent  of  the  superintendent  thereto 
granted,  shall  be  entitled  to  priority  in  subscribing  to  the  capi- 
tal stock  of  such  corporation  as  hereinafter  specified,  by  publica- 
tion once  a  week  for  six  successive  weeks  in  a  newspaper  published 
in  the  county  where  said  corporation  shall  have  its  principal  office 
and  also  in  the  state  paper  at  Albany.  If  three-fourths  of  the 
directors  of  such  corporation  shall  not  give  their  consent  thereto, 
such  corporation,  after  having  given  notice  once  a  week  for  six 
weeks,  of  its  intention  to  do  so,  and  of  the  meeting  hereinafter 
provided  for,  in  the  state  paper  and  in  a  newspaper  published  in 
the  county  where  such  corporation  is  located,  may,  with  the  consent 


238  The  Insurance  Law.  §  125. 

of  two-thirds  of  the  members  present  at  any  regular  annual  meet- 
ing, or  at  any  special  meeting  duly  called  for  the  purpose,  or  with 
the  consent  in  writing  of  two-thirds  of  the  members  of  such  cor- 
poration, imless  otherwise  provided  in  its  charter,  become  a  joint 
stock  corporation  by  conforming  its  charter  to  and  otherwise  pro- 
ceeding in  accordance  witli  this  chapter.     Every  member  of  such 
corporation  on  the  day  of  such  annual  or  special  meeting,  or  the 
date   of   such    written    consent,  or  the   date  of  the   filing  of  the 
amended  articles  of  incorporation  and  of  the  consent  of  the  super- 
intendent thereto,  shall  be  entitled  to  priority  in  subscribing  to 
the  capital  stock  of  such  corporation  for  one  month  after  the  open- 
ing of  the  books  of  subscription,  in  proportion  to  the  amount  of 
cash  premiums  paid  in  by  such  member  on  unexpired  risks  in 
force  on  the  day  of  such  annual  or  special  meeting,  or  the  date  of 
such  written  consent,  or  the  date  of  the  filing  of  such  amended  char- 
ter or  articles  and  of  the  consent  of  the  superintendent  thereto,  at 
the  expiration  of  such  month,  then  the  board  of  directors  shall  sell 
and  dispose  of  the  capital  stock  which  shall  not  have  been  taken  by 
the  members  aforesaid,  to  such  persons  as  may  subscribe  to  the 
same ;  and  when  the  capital  stock  shall  have  been  fully  subscribed 
to  and  paid  in,  the  directors  shall  notify  the  superintedent  of  that 
fact,  and  thereupon  the  superintendent  shall  make  or  cause  to  be 
made  an  examination  of  the  affairs  of  the  said  company,  and  if  he 
shall  find  that  the  proceedings  for  the  change  thereof  from  a  do- 
mestic mutual  fire  insurance  corporation  to  an  insurance  stock  cor- 
poration, have  been  regularly  taken  in  conformity  with  this  section, 
and  that  the  capital  stock  shall  have  been  fully  subscribed  for,  and 
the  amount  thereof  paid  in,  in  cash,  or  in  such  securities  as  stock 
insurance  corporations  are  entitled  to  hold  under  the  provisions  of 
this  chapter  for  capital  investments,  then  the  superintendent  shall 
certify  that  such  examination  has  been  made,  and  that  the  proceed- 
ings  have   been    regularly   taken,  the  capital  stock    paid  in  and 
the  said  corporation  recognized  as  an  insurance  stock  corporation, 
and  thereupon  said  corporation  shall  come  under  the  provisions  of 
this  chapter  in  the  same  manner  as  if  it  had  been  incorporated 
thereunder. 

Source. — Former  §  125,  as  amended  by  L.  189fi,  ohap.  850;  originally  revised 
from  L.  1853,  chap.  466,  §  18,  as  amended  by  L.  1862,  chap.  367. 


§  126.       Fire  Insurance  Corporation.         239 

INTEREST. —  Right  of  the  joint  stock  corporation,  out  of  the  assets  of 
the  mutual  company,  to  pay  receipts  bearing  ten  per  cent  interest  issued  by 
it.     Manhattan  Fire  Ins.  Co.  v.  Fox,  74  App.  Div.,  271. 

CONSENT. —  Since  the  amendment  of  this  section  by  chap.  850  of  the 
Laws  of  189fi,  it  is  no  longer  necessary  to  obtain  the  consent  of  two-thirds 
of  the  members  to  change  a  mutual  company  to  a  stock  corporation;  the 
change  made  by  this  amendment  does  not  violate  the  constitutional  rights 
of  the  members  or  policyholders  in  such  a  company.  Grobe  v.  Erie  Co. 
Mut.  Ins.  Co.,  39  App.'  Div.,  183. 

RIGHT  TO  SUBSCRIBE. —  Where  a  mutual  fire  Insurance  company  pro- 
poses to  convert  itself  into  a  stock  corporation,  the  right  to  subscribe  is 
dependent  upon  the  amount  of  cash  paid  in  premiums  on  policies  outstanding. 
The  terra  "  unexpired  risks  in  force,"  applies  to  policies  outstanding  and  not 
to   property   insured.     Attorney- General's   Rep.,  July  2,  1913. 

Upon  conversion  of  a  mutual  fire  insurance  corporation  into  a  stock  cor- 
poration, the  rigiht  of  a  member  to  subscribe  to  the  capital  stock  is  determined 
by  the  amount  of  cash  premiums  paid  in  by  him  upon  policies  in  force  at 
that  time.     Attorney-General  Rep.,  1914,  page  75. 

§  126.    Extension  of  term  of  charter  of  mutual  corporations. 

Every  domestic  mutual  fire  insurance  corporation,  having  a  capi- 
tal in  premium  notes  of  an  amount  required  of  such  corporation  in- 
corporated under  this  article,  may  at  any  time  within  two  years 
previous  to  the  termination  of  its  charter,  after  giving  notice  once  a 
week  for  six  weeks  successively  in  a  newspaper  published  in  the 
county  where  such  corporation  is  located  of  such  intention,  and 
with  a  declaration,  under  its  corporate  seal,  signed  by  its  president 
and  two-thirds  of  its  directors,  of  their  desire  for  such  extension, 
extend  tlie  term  of  its  original  charter  for  a  period  of  tliirty  years, 
by  altering  and  amending  the  same  so  as  to  accord  with  the  pro- 
visions of  this  chapter,  and  filing  a  copy  of  such  amended  charter 
nnd  declaration  in  the  office  of  the  superintendent  of  insurance; 
whereupon  the  same  proceedings  shall  be  had  as  are  required  upon 
the  formation  of  a  corporation  under  this  article,  except  as  to  itj- 
capital,  which  shall  be  certified  to  be  in  accordance  with  the  pro- 
visions of  this  section.  Every  corporation  so  extended  shall  come 
under  the  provisions  of  this  chapter  in  the  same  manner  as  if  it  had 
been  int?orporated  originally  tliereunder.  Every  fire  insurance 
corporation  which  has  heretofore  changed  from  a  mutual  to  a  joint- 
stock  corporation,  pursuant  to  the  provisions  of  law,  shall  be  deemed 
and  be  held  by  such  change  to  have  continued  and  extended  its 
ohnrtor  for  the  period  named  therein,  not  exceeding  thirty  years 
from  the  time  of  such  change. 


240  The  Insurance  Law.  §  127. 

Source.— Former  §  126;  originally  revised  from  L.  1853,  chap.  466,  §  18,  as 
amended  by  L.  1862,  chap.  367;  L.  1882,  chap.  243. 

See  §  37,  General  Corporation  Law,  chap.  28  of  1909.  Extension  of  cor- 
porate existence. 

§  127.    Existing  corporations  may  reincorporate. 

Any  domestic  fire  insurance  corporation  may  change  its  name, 
increase  the  amount  of  its  capital,  or  avail  itself  of  any  powers  con- 
ferred by  the  provisions  of  this  chapter  upon  filing  with  the  super- 
intendent of  insurance  proof  of  publication  of  a  notice  of  its  inten- 
tion to  do  so  once  a  week  for  six  successive  weeks  in  the  state  paper 
and  in  a  newspaper  published  in  the  county  where  its  office  is  lo- 
cated, and  if  a  stock  corporation,  the  written  consent  of  three- 
fourths  in  amount  of  its  stockholders ;  or,  if  a  mutual  corporation, 
the  unanimous  consent  of  its  directors  unless  otherwise  provided  in 
its  charter;  and  a  declaration  under  its  corporate  seal,  signed  by 
its  president  and  directors,  of  its  desire  to  do  so,  and  upon  obtain- 
ing and  filing  with  the  superintendent  his  consent  thereto.  It  shall 
thereupon  file  with  the  superintendent  and  in  the  office  of  the  clerk 
of  the  county  where  its  office  is  located  a  copy  of  its  charter  so  al- 
tered or  amended,  and  upon  the  same  proceedings  being  thereafter 
had  as  are  required  by  this  chapter  upon  the  formation  and  organ- 
ization of  an  insurance  corporation  under  this  article,  it  shall  be 
deemed  and  be  held  to  be  incorporated  under  the  provisions  of  this 

article. 

Source. — Former  §  127  j  originally  revised  from  L.  1853,  chap.  466,  §  19,  as 
amended  by  L.  1875,  ohap.  208. 

See  §  37,  ante.  Corporations  heretofore  formed  brought  within  the  pro- 
visions of  the  Insurance  Law. 

See  §  106,  Statutory  Construction  Law,  dhap.  27  of  1909,  as  to  effect  of 
repeal  and  re-enactment  of  prior  statutes. 

See  §  60  et  seq.,  General  Corporation  Law.  Proceedings  to  change  the  name 
of  a  corporation. 

Section  43  of  the  Stock  Corporation  Law  regulates  the  time  within  which 
capital  stock  shall  be  paid  in,  but  the  certificate  filed  according  to  said  law 
is  evidence  of  authority  to  increase  or  reduce  such  capital  stock.  Attorney- 
General  Rep.,  Jan.  21,  1896. 

Where  there  are  provisions  affecting  proceedings  to  increase  capital  stock 
in  both  the  Stock  Corporation  Law  and  the  Insurance  Law,  tlhe  latter  must 
be  considered  as  additional  where  not  in  conflict;  the  consent  of  the  superin- 
tendent to  the  proposed  increase  could  not  be  properly  given  in  advance  to 
filing  with  him  proof  of  other  steps  required  by  tlie  statute;  proof  of  con- 
sent of  Sitoekholdcrs  to  the  increase  must  be  shown  by  affidavit  of  the 
secretary.     Attorney-General  Rep.,  June  13,  1903. 


§§  128,  129.      FiEE  Insueance  Corporation.  241 

§  128.    Duration  of  charter. 

Every  fire  insurance  corporation  incorporated  or  extended  under 
this  chapter  shall  continue  in  existence  for  the  temi  specified  in  its 

charter,  not  exceeding  thirty  years. 

Source. — Former  §  128;  originally  revised  from  L.  1853,  diap.  466,  §  19,  aa 
amended  by  L.  1875,  chap.  208. 

See  §  124,  ante.    Extension  of  charter  of  joint  stock  corporation. 

See  §  126,  ante.    Extension  of  term  of  charter  of  mutual  corporation. 

See  §  37,  General  Corporation  Law,  chap.  28  of  1909.    Extension  of  cor- 
porate existence. 

CHARTER  EXPIRED.— The  fact  that  the  charter  of  an  insurance  com- 
pany expires,  by  its  own  limitation,  within  the  period  during  which  a  policy 
by  its  terms  is  to  continue,  will  not  avoid  the  policy  and  discharge  the 
insured  from  his  liability  upon  his  premium  note;  the  policy  is  valid  for  the 
unexpired  term  of  the  charter.  Huntley  v.  Beecher,  30  Barb.,  580;  Huntley  v 
Merrill,  32  Barb.,  626. 

§  129.  Merger  or  consolidation  of  fire  insurance  cor- 
porations. 

Any  two  fire  insurance  corporations  org^anized  under  any  law 
of  this  state  may  merge  or  consolidate  such  corporations  into  one 
corporation  under  the  name  of  one  or  more  of  the  corporations.  The 
corporations  may  enter  into  and  make  an  agreement  for  such  mer- 
ger or  consolidation  under  their  respective  corporate  seals,  prescril>- 
ing  its  terms  and  conditions;  the  amount  of  its  capital,  whicli  shall 
not  be  larger  in  amount  than  the  aggregate  amount  of  capital  of 
the  merged  or  consolidated  corporations  and  the  number  of  shares 
into  which  it  is  to  be  divided.  Such  agreement  must  be  assentod 
to  by  a  vote  of  the  majority  of  the  number  of  directors  of  each  cor- 
poration prescribed  in  its  charter  and  must  be  approved  by  the 
votes  of  stockholders  owning  at  least  two-thirds  of  the  stock  of  each 
corporation  represented  and  voted  upon  in  person  or  by  proxy  at  a 
meeting,  called  separately  for  that  pur|x>se,  upon  a  notice  stating 
the  time,  place  and  object  of  the  meeting  served  at  least  tliirty  days 
previously  upon  each  personally  or  mailed  to  him  at  his  last  known 
post  office  address  and  also  published  at  least  once  a  week  for  four 
weeks  successively  in  some  newspaper  printed  in  the  state,  town  or 
county  where  such  corporation  has  its  principal  office  and  there 
shall  be  endorsed  upon  the  agreement  the  certificate  of  the  secre- 
taries of  the  respective  corporations  under  the  seals  thereof  to  the 
effect  that  the  same  has  been  assented  to  by  such  votes  of  the  di- 


242  The  Insueance  Law.  §  129. 

rectors  and  approved  by  such  votes  of  the  stockholders.  The  agree- 
ment shall  contain  a  copy  of  the  charter  under  which  the  business 
is  to  be  conducted,  which  shall  conform  to  the  provisions  of  either 
one  or  more  of  the  charters  of  the  merging  or  consolidating  corpo- 
rations; and/ the  continuation  of  said  charter  shall  be  for  the  time 
therein  stated,  not  exceeding  the  longest  unexpired  time  of  the 
charter  of  one  of  the  merging  or  consolidating  corporations.  Every 
such  agreement  must  have  the  approval  of  the  superintendent  of 
insurance.  Upon  filing  such  agreement,  with  such  certificate  of 
the  secretaries  and  approval  of  the  superintendent  of  insurance 
endorsed  thereon  in  the  office  of  the  superintendent  of  insurance 
and  a  duplicate  or  certified  copy  thereof  in  the  office  of  the  clerk 
of  the  county  where  the  office  of  the  contracting  corporation  is 
located,  the  details  of  such  agreement  may  be  carried  into  effect 
as  provided  therein.  The  corporation  may  require  the  return  of 
the  original  certificates  of  stock  held  by  each  stockholder  in  eacli 
of  the  corporations  to  be  merged  or  consolidated,  and  issue  in  lieu 
thereof  new  certificates  for  such  number  of  shares  of  its  o^vn  stock 
as  such  stockholders  may  be  entitled  to  receive.  Upon  such  merger 
or  consolidation  all  the  rights,  franchises  and  interests  of  the  cor- 
porations so  merging  or  consolidating  in  and  to  every  species  of 
property  and  things  in  action  belonging  to  them,  or  either  of  them, 
shall  be  deemed  to  be  transferred  to  and  vested  in  the  new  cor- 
poration, without  any  other  deed  or  transfer,  and  the  new  corpora- 
tion shall  hold  and  enjoy  the  same  to  the  same  extent  as  if  tlie 
old  corporations,  or  either  of  them,  should  have  continued  to  retain 
their  titles  and  transact  business.  The  new  corporation  shall 
succeed  to  all  the  obligations  and  liabilities  of  the  old  corporations, 
or  any  of  them,  and  shall  be  held  liable  to  pay  and  discharge  all 
such  debts  and  liabilities  in  the  same  manner  as  if  they  had  been 
incurred  or  contracted  by  it  The  stockholders  of  the  old  corpo 
ration  shall  continue  subject  to  all  the  liabilities,  claims  and 
demands  existing  against  them,  or  either  of  them,  at  or  before  such 
merger  or  consolidation.  No  action  or  proceeding  pending  at  the 
time  of  the  consolidation  in  which  any  or  all  of  the  old  corpora- 
tions, may  be  a  party,  shall  abate  or  discontinue  by  reason  of  tlie 
merger  or  consolidation,  but  tlie  same  may  be  prosecuted  to  final 
judgment  in  the  same  manner  as  if  the  merger  or  consolidation 


§  130.  Fire  Insurance  Corporation.  243 

had  not  taken  place,  or  the  new  corporation  may  be  substituted 
in  place  of  any  corporation  so  merged  or  consolidated  by  order 
of  the  court  in  which  the  action  or  proceeding  may  be  pending. 
So  far  as  they  may  be  applicable,  the  provisions  of  this  section 
shall  apply  to  all  corporations  heretofore  merged  or  consolidated. 

Source. — Former  §  129,  as  amended  by  L.  1899,  chap.  165;  originally  revised 
from  L.  1878,  diap.  98. 

See  §  42,  General  Corporation  Law,  chap.  28  of  1909  Stoclcholder  may 
waive  notice. 

See  §  180,  Tax  Law,  chap.  62  of  1909.  Consolidating  corporation  to  pay 
organization  tax  upon  amount  of  capital  in  excess  of  tb»-!  aggT-egate  capital 
of  the  consolidating  companies. 

APPLICATION  OF  SECTION.— This  section  ha^  no  application  to  a 
change  from  a  mutual  to  a  stock  corporation.  Manhattan  Fire  Ins.  Co.  v. 
Fox,  74  App.  Div.,  271. 

§  130.    Guaranty  and  special  reserve  funds. 

Any  domestic  fire  insurance  corporation  may  create  a  guaranty 
surplus  fund  and  a  special  reserve  fund  upon  the  adoption  of  a 
resolution  by  its  board  of  directors  at  a  regular  meeting,  and 
upon  filing  with  the  superintendent  of  insurance  a  copy  thereof, 
declaring  their  desire  and  intention  to  create  such  funds  and  to 
do  business  under  this  and  the  two  following  sections.  The  super- 
intendent shall  thereupon  make  or  cause  to  be  made  an  examina- 
tion of  such  corporation,  and  he  shall  make  a  certificate  of  the 
result  thereof,  which  shall  particularly  set  forth  the  amount  of 
surplus  funds  held  oj  it  at  the  date  of  the  examination,  which, 
under  the  provisions  of  this  section  may  be  equally  divided  be- 
tween and  set  apart  to  constitute  guaranty  surplus  and  special  re- 
serve funds,  which  certificate  shall  be  recorded  in  the  insurance 
department 

Thereafter  all  policies  and  renewals  of  policies  issued  by  sudi 
corporation  shall  have  printed  thereon  by  it  a  notice  that  they 
are  issued  under  and  in  pursuance  of  this  and  the  two  following 
sections  of  this  chapter  referring  to  the  same  by  the  numbers 
of  sections,  and  all  such  policies  and  renewals  shall  be  subject  to 
the  provisions  of  such  sections.  After  the  passage  and  filing  of 
such  resolution,  the  corporation  shall  not  make,  declare  or  pay  in 
any  form  any  dividend  upon  its  capital  stock  exceeding  seven  Y>eT 
centum  per  annum  thereon,  and  upon  the  suq)]us  funds  to  be  formed 


244  The  Insukance  Law.  §  130. 

tliercuiulcr,  until  after  its  guaranty  surplus  fund  and  its  special 
reserve  fund  shall  have  together  accumulated  to  an  amount  equal 
to  its  capital  stock;  and  until  such  funds  shall  together  amount 
to  a  sum  equal  to  its  capital  stock,  the  entire  surplus  pr  '^t^  of 
the  corporation  above  such  annual  dividend  of  seven  per  centum 
shall  be  equally  divided  betv^een  and  be  set  apart  to  constitute 
such  guaranty  surplus  and  sj>ecial  reserve  funds,  which  funds  shall 
be  held  and  used  as  hereinafter  provided  and  not  otherwise.  Any 
such  corporation  which  shall  declare  or  pay  any  dividend  contrary 
to  the  provisions  herein  contained,  shall  be  deemed  to  have  forfeited 
ita  charter. 

In  estimating  the  profits  of  any  such  corporation  for  the  purpose 
of  making  a  division  thereof  between  tJie  guaranty  surplus  fund 
and  the  special  reserve  fund,  until  such  funds  shall  together 
amount  to  a  sum  equal  to  its  capital  stock,  there  shall  be  deducted 
from  the  gross  assets  of  the  corporation,  including  for  this  purpose 
the  amount  of  the  special  reserve  fund,  the  sum  of  the  following 
items: 

1.  The  amount  of  all  outstanding  claims. 

2.  An  amount  sufficient  to  meet  the  liability  of  the  corporation 
for  the  unearned  premiums  upon  its  unexpired  policies,  which  shall 
be  at  least  equal  to  the  xmearned  premiums  on  policies  having  one 
year  or  less  to  run,  and  a  pro  rata  proportion  of  the  premiums 
received  on  the  policies  having  more  than  one  year  to  run,  and 
shall  be  known  as  the  reinsurance  liability. 

3.  The  amount  of  its  guaranty  surplus  fund  and  its  special 
reserve  fund. 

4.  The  amount  of  its  capital. 

5.  Interest  at  the  rate  of  seven  per  centum  per  annum  upon  the 
amount  of  its  capital  and  of  such  funds  for  \vhatever  time  shall 
have  elapsed  since  the  last  preceding  cash  dividend. 

The  balance  shall  constitute  the  net  surplus  of  the  corporation 
subject  to  the  equal  division  between  the  funds  as  herein  provided. 
When  the  corporation  shall  notify  the  superintendent  of  insurance 
that  it  has  fulfilled  the  requirements  of  this  section,  and  that  its 
guaranty  surplus  fund  and  its  special  reserve  fund,  taken  together, 
equal  its  capital  stock,  he  shall  make  an  examination  of  the  corpo- 


§  131.  Fire  Insueance  Coepoeation.  246 

ration  and  make  a  certificate  of  the  result  thereof;  and  thereafter 
such  corporation  may  continue,  out  of  any  subsequent  profits  of 
its  business,  to  add  to  such  funds,  either  the  whole  or  only  a  part 
thereof,  but  when  any  addition  is  made  to  the  special  reserve  fund, 
an  equal  sum  shall  be  carried  to  the  guaranty  surplus  fund.  Pro- 
vided, however,  that  no  such  corporation  shall  establish  such 
guaranty  surplus  fund  and  special  reserve  fund  after  June  first, 
nineteen  hundred  and  fifteen. 

Source.— Former  §  130;  originally  revised  from  L.  1874,  chap.  189,  §§  1-3, 
§  6,  as  amended  by  L.  1878,  chap.  282. 

Amended  by  L.  1915,  chap.  369.     In  effect  May  1,  1915. 

Note. —  TJie  amendment  by  L.  1915,  chap.  369,  in  relation  to  guarantee 
surplus  and  special  reserve  fund,  prohibited  the  establishing  of  S'Uch  funds 
by  foreign  insurance  corporations  after  June  1,  1915.  It  adds  new  section 
132a,  providing  that  companies  which  have  heretofore  established  a  guarantee 
surplus  and  special  reserve  fund  may  discontinue  such  funds  and  thereafter 
cease  doing  business  under  sections  130,  131  and  132. —  Ed. 

See  §  118,  ante.  Allowances  of  assets  and  estimation  of  liabilities  upon 
examination. 

Guarantee  surplus  fund  and  special  reserve  funds  are  to  be  regarded  as 
a  liability  only  in  the  sense  that  surplus  is  a  liability.  Attorney-General 
Rep.,  1904,  page  413. 

INVESTMENT. —  The  second  sentence  of  §  16  applies  to  investment  of  the 
special  reserve  fund,  as  provided  for  by  §  130,  in  excess  of  one-half  of  its 
capital  stock.    Attorney-General  Rep.,  1901,  page  240. 

REDUCTION  OF  FUND. —  An  insurance  company  retiring  from  business 
may  reduce  its  "  guaranty  and  special  reserve  fund "  with  the  superintendent 
of  insurance  by  withdrawals  and  exchanges  to  an  amount  sufficiently  large 
to  secure  its  outstanding  liabilities.  In  re  Standard  Fire  Insurance  Com- 
pany, Attorney-General  Rep.,  1893,  page  392. 

WITHDRAWAL  OF  FUNDS.— Funds  cannot  be  withdrawn  from  the 
special  reserve  fund  when  the  guaranty  surplus  fimd  is  impaired.  In  re 
American  Fire  Ins.  Co.,  Attorney-General  Rep.,  1896,  page  25. 

§  131.    Funds;  how  invested. 

Such  guaranty  surplus  fund  shall  be  held  and  invested  by  such 
corporation  in  the  same  manner  as  its  capital  stock  and  surplus 
accumulations,  and  shall  be  liable  and  applicable  in  the  same 
manner  as  the  capital  of  the  corporation  to  the  payment  generally 
of  its  losses.  Such  special  reserve  fund,  until  it  shall  amount  to 
a  sum  equal  to  one-half  of  the  capital  stock,  shall  be  invested  in 
the  same  manner  as  the  capital  of  the  corporation,  and  any  addi- 
tional sum  added  to  such  fund  shall  be  invested  in  any  securities 
in  which  the  corporation  is  by  law  authorized  to  invest  its  capital 
or  its  surplus  accumulations,  and  shall  be  deposited  from  time  to 


246  The  Insurance  Law.  §  132. 

time,  as  the  same  shall  accumulate  and  be  invested,  with  the 
superintendent  of  insurance. 

Such  special  reserve  fund  shall  be  deemed  a  fund  contributed  by 
the  stockliolders  to  protect  such  corporation  and  its  policy  holders 
otlier  tlian  claimants  for  losses  already  existing  or  then  occui-red, 
in  case  of  any  extraordinary  conflagration  or  conflagrations  as 
hereinafter  mentioned,  and  shall  not  be  regarded  as  any  part  or 
portion  of  the  assets  of  the  corporation  so  as  to  be  liable  for  any 
claim  for  loss  by  fire  or  otherwise,  except  as  herein  provided. 

Source. — ^Former  §  131;  originally  revised  from  L.  1874,  chap.  189,  §  4,  §  5, 
as  amended  by  L.  1878,  chap.  282. 

SSee  §  16,  ante.     Investment  of  capital  and  surplus. 

FUNDS. —  The  guaranty  surplus  fund  and  the  special  reserve  fund  con- 
stitute liabilities  of  the  corporation  and  must  be  so  regarded  in  any  state- 
ment purporting  to  show  the  true  financial  condition  of  the  company;  the 
special  reserve  fund  cannot  be  said  to  be  depleted  as  it  remains  intact 
in  the  vaults  of  the  insurance  department;  policyholders  holding  policies 
under  §§  130,  131  and  132  have  the  special  reserve  fund  as  a  special  trust 
for  their  protection  until  it  is  used  as  capital  stock  because  the  latter  is 
depleted;  the  extinguishment  of  the  guaranty  surplus  fund  does  not  limit 
the  right  of  the  company  to  do  business.  Attorney-General  Rep.,  1904,  page  262. 

INVESTMENT. —  Until  the  special  reserve  fund  amounts  to  one-half  the 
capital  stock  it  should  be  invested  as  provided  by  §  13;  when  in  excess 
of  such  amount  it  is  to  be  invested  as  provided  by  §  16.  Attorney-General 
Rep.,  1901,  page  240. 

EXCHANGE  OF  SECURITIES.— The  deposit  for  a  special  reserve  fund 
is  intended  to  protect  policyholders  from  future  losses  in  the  event  of 
extraordinary  conflagrations;  in  the  exchange  of  securities  of  such  fund 
they  should  only  be  accepted  at  their  par  value,  or  of  equal  par  and  market 
value  with  those  exchanged  for.  In  re  Continental  Ins.  Co.,  Attorney-General 
Rep.,  1896,  page  279. 

§  132.    Proceedings  in  case  of  extensive  conflagrations. 

^Vhen  any  extensive  conflagration  or  conflagrations  shall  occur 
whereby  the  claims  upon  the  corporation  shall  exceed  the  amount 
of  its  capital  stock  and  of  the  guaranty  surplus  fund  hereinbefore 
provided,  the  corporation  shall  notify  the  superintendent  of 
insurance  of  the  fact,  who  shall  then  make  or  cause  to  be  made, 
an  examination  of  the  corporation,  and  shall  issue  his  certificate 
in  duplicate  of  the  result,  showing  the  amounts  of  capital,  of 
guaranty  surplus  fund,  of  special  reserve  fund,  of  reinsurance 
liability,  and  all  other  assets. 

One  of  such  certificates  shall  be  given  the  corporation,  and  the 
other  shall  be  recorded  in  the  insurance  department.     Such  special 


§  132.  FiKE  Insurance  'Corporation.  247 

reserve  fund  shall  be  immediately  held  to  protect  all  policy  holders 
of  the  corporation  other  than  such  as  are  claimants  upon  it  at  the 
time,  or  such  as  become  claimants  in  consequence  of  such  con- 
flagration or  conflagrations. 

The  amount  of  such  special  reserve  fund,  and  an  amount  equal 
to  the  unearned  premiums  of  such  corporation,  to  be  ascertained 
as  hereinbefore  provided,  shall  constitute  the  capital  and  assets  of 
such  corporation  for  the  protection  of  policy  holders  other  than 
such  claimants,  and  for  the  further  conduct  of  its  business.  Such 
certificate  of  the  superintendent  shall  be  binding  and  conclusive 
upon  all  parties  interested  in  the  corporation,  whether  stockholders, 
creditors  or  policy  holders.  Upon  the  payment  to  the  claimants 
for  losses  or  otherwise,  existing  at  the  time  of  or  caused  by  such 
general  conflagration  or  conflagrations,  of  an  amount  to  which  they 
are  respectively  entitled  in  proportion  to  their  several  claims,  of 
the  full  sum  of  the  capital  of  the  corporation  and  of  its  guaranty 
surplus  fund,  and  of  its  assets,  except  only  such  special  reserve 
fund  and  an  amount  of  its  assets  equal  to  the  liability  of  the  cor- 
poration for  unearned  premiums,  as  so  certified  by  the  superin- 
tendent, such  corporation  shall  be  forever  discharged  from  any 
and  all  further  liability  to  such  claimants  and  to  each  of  them. 

The  superintendent  shall,  after  issuing  such  certificate,  upon  the 
demand  of  the  corporation,  transfer  to  it  all  such  securities  as  shall 
have  been  deposited  with  him  by  it  as  such  special  reserve  fund. 
If  the  amount  of  such  special  reserve  fund  shall  be  less  than  fifty 
per  centum  of  the  full  amount  of  the  capital  of  the  corporation,  a 
re(]uisition  shall  be  issued  by  the  superintendent  upon  the  stock- 
holders to  make  up  the  capital  to  that  proportion  of  its  full  amount, 
in  the  manner  now  provided  by  law  in  the  case  of  a  corporation 
with  impaired  capital.  Any  capital  so  impaired  shall  be  so  made 
up  to  at  least  the  sum  of  two  hundred  thousand  dollars.  If  the 
corporation,  after  such  requisition,  shall  fail  to  make  up  its  capital 
to  at  least  such  amount  as  herein  directed  such  special  reserve  fund 
shall  be  held  as  security  and  liable  for  all  losses  occurring  upon 
policies  of  such  corporation  after  such  conflagration  or  conflagra- 
tions. If  any  amount  greater  than  a  sum  equal  to  one-half  of  its 
capital  stock  shall  by  such  corporation,  under  the  provisions  of  the 
two  preceding  sections,  have  been  deposited  with  such  superin- 


248  The  Insurance  Law.  §  132. 

tendent,  he  shall  retain  of  such  securities  a  sum  equal  to  one-half 
of  the  amount  lie  sha.l  so  hold  thereof  in  excess  of  such  one-half  of 
the  capital  stock,  and  transfer  the  balance  thereof  to  the  corpora- 
tion as  herein  provided.  The  amount  so  transferred  to  the 
corporation  shall,  from  the  time  of  such  transfer,  if  not  less  than 
two  hundred  thousand  dollars,  constitute  the  capital  stock  of  the 
corporation  for  the  further  conduct  of  its  business  as  hereinbefore 
provided.  The  sum  so  retained  by  the  superintendent  shall 
thenceforth  constitute  the  special  reserve  fund  of  the  corporation, 
to  which  additions  may  be  made  as  herein  provided,  and  shall  be 
held  in  the  same  manner,  for  the  same  purposes  and  under  the 
same  conditions  as  the  original  special  reserve  fund  of  the  cor- 
poration was  held.  The  corporation  shall  in  its  annual  statement 
to  the  insurance  department  set  forth  the  amount  of  such  special 
reserve  fund  and  of  its  guaranty  surplus  fund.  If  in  consequence 
of  the  payment  of  losses  by  fires,  or  of  the  expenses  of  the  business, 
or  of  the  interest  payable  under  the  provisions  of  this  chapter  to 
stockholders,  or  from  any  cause,  the  guaranty  surplus  fund  shall  bt 
reduced  in  amount  below  the  amount  of  the  special  reserve  fund., 
the  directors  of  the  corporation  shall  have  the  right,  at  their 
option,  at  the  time  of  making  any  division  of  the  net  profits  as 
herein  provided,  to  carry  a  larger  sum  to  the  guaranty  surplus  fund 
than  to  the  special  reserve  fund;  but  this  privilege  shall  cease 
when  the  tAvo  funds  are  made  equal  in  amount. 

The  policy  registers,  insurance  maps,  books  of  record  and  other 
books  in  actual  use  by  the  corporation  in  its  business,  are  not  to  be 
considered  as  assets,  but  shall  be  held  by  it  for  its  use  in  the  pro- 
tection of  its  policyholders  not  claimants  for  losses  at  the  time  of 
such  general  conflagration.  If  after  the  accumulation  of  such 
special  reserve  fund,  it  shall  appear  upon  examination  by  the 
superintendent  that  the  capital  of  the  corporation  has,  in  the 
absence  of  any  such  extensive  conflagration,  become  impaired,  he 
shall  order  a  call  upon  the  stockholders  to  make  up  such  impair- 
ment, and  the  board  of  directors  may  either  comply  with  such 
order  and  require  the  necessary  payments  of  the  stocldiolders,  or, 
at  their  option,  they  may  apply  for  that  purpose  so  much  of  such 
special  reserve  fund  as  will  make  such  impairment  good.  'No  cor- 
poration doing  business  under  this  and  the  two  preceding  sections 


§  132-a.  Fire  Insurance  Corporation.  249 

sliall  insure  any  larger  amount  upon  any  single  risk  than  is  per- 
mitted by  law  to  a  corporation  possessing  the  same  amount  of 
capital  irrespective  of  the  funds  hereinbefore  provided  for. 

Source. — Former  §  132;  originally  revised  from  L.  1874,  chap.  189,  §§  7,  8, 
as  amended  by  L.  1878,  ohap.  282. 

WITHDRAWAL  OF  FUNDS.—  Funds  cannot  be  withdrawn  from  the  special 
reserve  fund  when  the  guaranty  surplus  fund  is  impaired.  In  re  American 
Fire  Ins.  Co.,  Attorney-General  Rep.,  1896,  page  25. 

Special  reserve  fund  should  not  be  withdrawn  where  the  surplus  fund  is 
impaired.    In  re  Amer.  Fire  Ins.  Co.,  Attorney-General  Rep.,  1896,  page  237. 

The  statute  does  not  contemplate  the  maintenance  of  the  so-called  guaranty 
surplus  fund  at  a  parity  with  the  special  reserve  fund,  but  the  provisions  of 
section  132  indicate  that  the  legislature  expressly  contemplated  that  the  guar- 
anty surplus  fund  might  fall  below  the  special  reserve  fund.  Attomey-Gen- 
eral's  opinion,  December  3,  1908. 

§  132-a.  Discontinuance  of  special  reserve  and  guaranty 
surplus  funds. 

Any  domestic  fire  insurance  corporation  which  has  hereto- 
fore established  a  guaranty  surplus  fund  and  special  reserve 
fund  may,  at  a  regular  meeting  of  its  board  of  directors,  adopt 
a  resolution  declaring  its  desire  and  intention  to  discontinue  such 
funds  and  to  cease  to  do  business  under  and  in  pursuance  of 
sections  one  hundred  and  thirty,  one  hundred  and  thirty-one  and 
one  hundred  and  thirty-two  of  this  chapter,  and  file  a  certified 
copy  of  such  resolution  with  the  superintendent  of  insurance. 

Upon  the  adoption  and  filing  of  such  resolution,  all  rights  of 
such  corporation  to  withhold  such  special  reserve  fund  from  its 
general  creditors  shall  be  terminated  and  the  corporation  shall 
discontinue  printing  upon  its  policies  or  renewals  the  notice  pro- 
vided for  in  section  one  hundred  and  thirty  of  this  chapter,  and 
thereafter  the  provisions  of  said  sections  one  hundred  and  thirty, 
one  hundred  and  thirty-one  and  one  hundred  and  thirty-two  shall 
cease  to  apply  to  such  corporation;  provided  that  the  special 
reserve  fund  of  such  corporation  shall  continue  at  the  amount 
prescribed  by  said  sections  at  the  date  of  the  making  and  filing 
of  such  resolution  and  the  guaranty  surplus  fund  shall  continue 
at  a  like  amount,  but  such  funds  need  not  be  increased  on  account 
of  any  increase  in  capital  of  any  such  corporation  after  the 
adoption  and  filing  of  such  resolution  and  shall  be  held  and  in- 
vested as  provided  in  said  sections,  but  only  for  the  purpose  of 


250  The  Insurance  Law.  §  133. 

assuring  to  the  holders  of  policies  at  the  time  such  resolution  is 
filed  with  the  superintendent  of  insurance  such  rights  and  privi- 
leges as  maj  inure  to  them  under  said  sections. 

At  the  expiration  of  five  years  after  the  adoption  and  filing  of 
such  resolution  hj]  any  such  corporation,  the  special  reserve  fund 
shall  be  reduced  to  an  amount  equal  to  the  unearned  premium 
upon  and  all  losses  incurred  and  unpaid  under  any  remaining 
policies  which  were  outstanding  at  the  time  of  the  adoption  and 
filing  of  such  resolution ;  and  the  excess  of  the  special  fund  above 
such  amount  shall  bo  returned  by  the  superintendent  of  insurance 
to  such  corporation ;  and  when  all  policies  which  were  outstanding 
at  the  time  of  the  adoption  and  filing  of  such  resolution  shall  have 
terminated  by  expiration  or  by  cancellation,  the  entire  balance  of 
such  special  reserve  fund  shall  be  returned  to  such  corporation. 

Added  by  L.  1915,  chap.  369.     In  effect  May  1,  1915. 
See  note  after  §  130. 

§  133.  Payment  of  tax  by  agents  of  foreign  fire  insurance 
corporations  to  fire  departments. 

Except  in  the  cities  of  l^ew  York  and  Buffalo  there  shall  be 
paid  to  the  treasurer  of  the  fire  department  of  every  city  or  village 
of  this  state,  whether  incorporated  or  unincorporated,  having  a  fire 
department,  company  or  organization,  for  the  use  and  benefit  of 
such  department,  or  to  the  treasurer  of  such  fire  department  within 
the  fire  limits,  as  established  by  law,  of  an  unincorporated  village, 
and  when  no  treasurer  of  a  fire  department  exists,  then  to  the 
treasurer  or  other  fiscal  officer  of  such  city  or  village,  or  in  case 
of  an  unincorporated  village  to  the  supervisor  of  the  town  in  which 
such  village  is  situated  who,  for  the  purpose  of  this  chapter,  shall 
have  the  same  powers  as  the  treasurers  of  fire  departments,  on  the 
first  day  of  February  of  each  year,  by  every  person  who  shall  act  as 
agent  for  or  on  behalf  of  any  foreign  fire  insurance  corporation, 
association  or  individuals  which  insure  property  against  loss  or 
injury  by  fire,  the  sum  of  two  dollars  upon  the  hundred  doUai^s, 
and  at  that  rate,  upon  the  amount  of  all  premiums  which  during 
the  year  or  part  of  a  year  ending  on  the  last  preceding  thirty-first 
day  of  December  shall  have  been  received  by  such  agent  or  person, 
or  received  by  any  other  person  for  him,  for  any  insurance  effected 
or  procured  by  him  as  such  agent  or  broker  against  loss  or  injury 


§   183.  Fire  Iistsueance  Coepoeation.  251 

by  fire  upon  property  situate  within  the  corporate  limits  of  such 
eity  or  village,  or  within  the  fire  limits  of  such  unincorporated 
village.  Every  city,  except  the  city  of  New  York,  village,  fire 
department,  fire,  hose  or  hook  and  ladder  company,  fire  district,  or 
fire  district  association,  firemen's  benevolent  associations,  exempt 
or  veteran  firemen's  associations,  and  every  officer,  board  of 
officers  and  associations  receiving  any  portion  of  the  tax  directed 
to  be  paid  by  this  section  or  any  similar  provision  of  law  shall 
within  ten  days  after  the  receipt  of  the  same,  pay  to  the  treasurer 
of  the  firemen's  association  of  the  state  of  New  York,  ten  per 
centum  of  the  amount  so  received  by  it  or  him,  for  the  support 
or  maintenance  of  the  Volunteer  Firemen's  Home  at  Hudson, 
New  York.  On  or  before  the  first  day  of  April  in  each  year  every 
such  city,  village,  fire  department,  fire,  hose  or  hook  and  ladder 
company,  fire  district,  or  fire  district  association,  firemen's 
benevolent  associations,  exempt  or  veteran  firemen's  associations, 
officer,  board  of  officers  and  association,  shall,  by  its  chief  fiscal 
officer,  treasurer,  or  other  officer  whose  duty  it  may  be  to  receive 
such  funds,  deliver  to  the  treasurer  of  the  Firemen's  association 
of  the  state  of  New  York  a  statement  showing  the  name  of  each 
person  or  corporation  from  whom  any  such  tax  shall  have  been 
received  and  the  amount  paid  by  each,  which  statement  shall  be 
verified  by  the  officer  making  the  same  to  the  effect  that  the  same 
is  correct  and  true  and  that  such  statement  correctly  shows  the 
amount  of  such  tax  received  by  such  city,  village,  fire  department, 
fire,  hose,  or  hook  and  ladder  company,  fire  district,  or  fire  district 
association,  firemen's  benevolent  associations,  exempt  or  veteran 
firemen's  associations,  officer,  board  of  officers  and  association 
since  the  first  day  of  April  in  the  preceding  year.  Any  such  city, 
village,  fire  department,  fire,  hose  or  hook  and  ladder  company,  fire 
district,  or  fire  district  association,  firemen's  benevolent  associa- 
tions, exempt  or  veteran  firemen's  associations,  officer,  board  of 
officers  and  association  receiving  any  portion  of  such  tax  and 
failing  to  make  and  deliver  such  verified  statement  as  herein  pro- 
vided or  omitting  to  pay  ten  per  centum  thereof  to  the  treasurer 
of  the  Firemen's  association  of  the  state  of  New  York  as  provided 
herein  within  the  time  above  allowed  shall  forfeit  tlie  sum  of  fifty 
dollars  in  addition  to  the  amount  of  such  tax  to  be  recovered  in  an 


252  The  Insueance  Law.  §  134. 

action  which  may  be  maintained  by  said  Firemen's  association  of 
the  state  of  New  York  in  any  of  the  courts  of  this  state. 

Source. — Former  §  133,  as  amended  by  L.  1901,  chap.  726;  originally  revised 
from  R.  S.,  pt.  1,  chap.  20,  tit.  21,  §  3,  as  amended  by  L.  1837,  chap.  30;  L. 
1849,  chap.  178,  §  1;  L.  1875,  chap.  465,  §  1,  as  amended  by  L.  1890,  chap.  406; 
L.  1886,  chap.  604,  §  5,  as  amended  by  L.  1887,  c^ap.  520. 

FIRST  ULAJM, —  Section  133,  in  regard  to  the  percentage  tax  collected  from 
foreign  fire  insurance  companies  in  cities,  seems  to  provide  that  the  first 
claim  upon  such  monies  is  for  the  relief  of  exempt  or  veteran  volunteer  fire- 
men, administered  through  organized  firemen's  relief  or  benevolent  societies 
having  requisite  authority.  Exempt  Firemen's  Assn.  v.  City  of  Little  Falls, 
148  App.  Div.,  440. 

CONDITIONS. —  A  state  may  prohibit  a  foreign  corporation  from  trans- 
acting business  in  this  state,  or  may  impose  conditions,  on  compliance  of  which 
it  may  come.    People  v.  Fire  Assn.  of  Philadelphia,  92  N.  Y.,  311. 

§  523  of  the  New  York  Consolidation  Act,  requiring  every  person  who 
shall  act  in  the  county  and  city  of  New  York  as  agent  for  any  association 
of  individuals,  not  incorporated  by  the  laws  of  this  state,  in  effecting  insur- 
ance against  loss  or  injury  by  fire  in  that  county  and  city,  to  pay  annually 
to  the  city  fire  department  two  per  cent  of  the  amount  of  premiums  received 
by  him,  extends  to  the  agent  of  domestic  or  resident  non-incorporated  asso- 
ciations of  individual  underwriters.  Fire  Department  v.  Stanton,  159  N.  Y.,  229. 

APPORTIONiMENT. — Moneys  paid  by  agents  of  foreign  fire  insurance  com- 
panies, pursuant  to  requirements  of  §  133,  should  be  apportioned  among  the 
several  companies  which  have  been  recognized  by  the  common  council  of  the 
city  of  Oneida  as  members  of  the  fire  department  of  said  city.  Volunteer 
companies  have  no  preference  under  the  statute  over  paid  companies.  Cary 
V.  City  of  Oneida,  158  App.  Div.,  773. 

§  134.    Undertaking  of  agent. 

No  person  shall,  as  agent  for  any  such  foreign  insurance  corpo- 
ration, association  or  individuals,  effect  any  insurance  upon  any 
property  situate  in  any  city  or  village  of  this  state  upon  which  the 
pums  specified  in  the  preceding  section  are  required  to  be  paid,  or 
as  such  agent  procure  such  insurance  to  be  effected,  until  he  shall 
have  executed  and  delivered  to  the  officer  to  whom  such  account  is 
to  be  rendered  and  such  payments  to  be  made,  a  bond  to  such  fire 
department  in  the  penal  sum  of  five  hundred  dollars,  with  such 
sureties  as  such  treasurer,  supervisor  or  other  fiscal  officer  shall 
approve,  with  a  condition  that  he  will  annually  render  to  such 
treasurer,  supervisor  or  other  fiscal  officer,  on  the  first  day  of 
February  in  each  year  a  just  and  true  account,  verified  by  his  oath 
that  the  same  is  true,  of  all  premiums  which,  during  the  year 
ending  on  the  thirty-first  day  of  December  preceding  such  report, 
shall  have  been  received  by  him  or  any  other  person  for  him,  for 
any  insurance  against  loss  or  injury  by  fire  upon  property  situ- 


§  134.  Fire  Insurance  Corporation.  ^53 

ated  in  such  city  or  village,  which  shall  have  been  effected  or 
procured  by  him  to  have  been  effected  by  any  such  corporation, 
association  or  individuals,  and  that  he  will  annually,  on  the  first 
day  of  February  in  each  year,  pay  to  such  treasurer  or  supervisor 
or  other  fiscal  officer  two  dollars  upon  every  hundred  dollars,  and 
at  that  rate  upon  the  amount  of  such  premiums.  If  any  such 
agent  shall  desire  to  transact  business  in  more  than  one  city, 
town  or  village,  he  may,  instead  of  executing  and  delivering  a 
separate  bond  for  each  such  city,  town  or  village,  as  required  by 
this  section,  execute  and  file  with  the  superintendent  of  insur- 
ance a  bond  in  the  penal  sum  of  fifteen  hundred  dollars,  with 
such  sureties  as  the  superintendent  shall  approve,  conditioned 
that  he  will  make  his  account  and  pay  the  sums  so  required  to 
be  paid  in  each  city,  town  or  village  in  which  he  shall  effect 
insurance.  Any  such  corporation,  association  or  individual,  hav- 
ing authority  to  transact  business  in  this  state,  on  filing  a  bond 
in  the  penal  sum  of  two  thousand  five  hundred  dollars  with  the 
superintendent  of  insurance  that  it  will  make  its  account  and 
pay  the  sums  so  required  to  be  paid,  may  effect  such  insurance  in 
any  city,  toT\Ti  or  village  wherein  it  has  no  agent. 

Source. — Former  §  134;  originally  revised  from  R.  S.,  pt.  1,  chap.  20,  tit.  21, 
§  4;  L.  1849,  chap.  178,  §§  2-3;  L.  1875,  chap.  465,  §  2,  as  amended  by  L.  1890, 
chap.  406. 

Amended  by  L.  1913,  chap.  304. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  305  of 
1913  was  to  relieve  agents  of  foreign  fire  insurance  companies,  who  wish  to  do 
business  in  several  different  towns  or  cities,  from  executing  and  delivering  a 
separate  bond  for  each  such  city  or  town  by  executing  and  filing  with  the 
superintendent  a  bond  in  the  penal  sum  of  one  thousand  five  hundred  dollars 
with  such  sureties  as  the  superintendent  shall  approve,  conditioned  that  he 
8ha.ll  make  his  account  and  pay  the  sums  so  required  to  be  paid  in  each  city, 
town  or  village  in  which  he  shall  effect  insurance. — Ed. 

The  provisions  of  this  section  are  not  limited  in  their  application  to  local 
resident  agents  but  apply  to  all  agents  of  insurance  companies  writing  con- 
tracts of  insurance  within  the  State.  Fire  Dept.  of  East  Rochester  v.  Bar- 
ley, 73  Misc.,  628. 

The  requirement  of  filing  a  bond  to  secure  the  payment  of  taxes  on  insur- 
ance premiums  may  be  complied  with  by  the  filing  of  one  such  bond  for 
each  agent  notwithstanding  the  fact  of  his  representing  several  foreign  com- 
panies.    Attorney-General  Rep.,   1914,  page  78. 

SEPARATE  BOND.— It  is  not  necessary  that  a  sepnrate  bond  should  be 
filed  for  each  company  represented  by  an  agent,  for  the  single  bond  will 
furnish  adequate  security  for  the  payment  of  the  tax  in  section  133.  Attor- 
ney-General's Rep.,  October  30,  1913. 


264  The  Insurance  Law.  §§  135,   136. 

§  135.    Penalty  for  refusal  to  pay. 

Every  such  person  who  shall  effect  any  such  insurance  without 
having  executed  and  delivered  such  bond,  shall  for  each  offense,  for- 
feit two  hundred  dollars,  for  the  use  and  benefit  of  the  fire  depart- 
ment of  such  city  or  village,  to  be  collected  by  and  in  the  name  of 
the  fire  department,  treasurer  or  chief  fiscal  officer  of  the  city  or 
village  in  which  the  property  insured  is  situated.  The  treasurer  or 
chief  fiscal  officer  of  any  city  or  village  having  no  incorporated 
firemen's  relief  or  benevolent  society  receiving  any  money  under 
the  laws  of  this  state,  shall,  on  or  before  the  fifteenth  day  of 
February  in  each  year,  apportion  and  pay  over  all  such  moneys  so 
received  to  the  treasurers  of  such  of  the  several  fire  companies  as 
are  duly  recognized  by  the  common  council,  trustees  or  supervisors 
of  such  city  or  village. 

If  he  shall  neglect  or  refuse  to  perform  any  or  all  of  the  duties 
required  by  this  section,  he  shall  forfeit  the  sum  of  two  hur^dred 
dollars  for  every  such  neglect  or  refusal  for  the  use  and  benefit 
of  the  fire  department  of  such  city  or  village,  and  the  foreman  of 
any  fire  company  may  sue  for  and  maintain  an  action  in  the  name 
of  and  for  the  benefit  of  such  company  for  its  proportion  of  the 
penalties  prescribed  by  this  section. 

Source. — Former  §  135;  originally  revised  from  L.  1875,  chap.  465,  §  3,  as 
amended  by  L.  1886,  chap.  604. 

ACTION  FOR  PENALTY.— A  person  seeking  to  maintain  an  action  for 
a  statutory  penalty  must  state  every  fact  required  to  enable  the  court  to 
judge  whether  he  has  a  cause  of  action  under  the  statute;  a  penalty  under 
S  135  of  the  Insurance  Law  does  not  relate  to  an  act  done  outside  of  the 
«tate  of  New  York.    Ithaca  Fire  Dept.  v.  Rice.  108  App.  Div..  100. 

§  136.    Penalty  for  refusal  to  exhibit  foreign  fire  policies. 

Every  person  whose  property  shall  be  insured  in  violation  of 
section  135  of  this  chapter,  and  every  person  having  the  care  or 
charge  of  property  so  insured,  or  of  policies  of  insurance  placed  in 
violation  of  such  section,  as  agent  or  trustee  for  another,  who  shall 
refuse  or  neglect  to  exhibit  to  the  ofiicer,  entitled  by  section  134  of 
this  chapter  to  receive  the  per  centum  of  premium  in  such  section 
provided,  all  policies  so  placed  upon  such  property,  or  shall  neglect 
or  refuse  to  give  such  officer  full  information  as  to  when,  by  whom, 
and  in  what  corporation  or  corporations  such  property  sliall  be  ho 
insured,  and  the  name  of  the  agent,  broker  or  other  person  con- 


§   137.  Fire  Insurance  Corporation.  256 

nee  ted  with  the  effecting  of  such  insurance,  upon  demand  being 
duly  made  by  such  officer  shall  become  liable  to  an  action  by  and  in 
the  name  of  the  fire  department,  organization  or  company  of  which 
such  officer  shall  be  the  treasurer,  for  the  sum  of  one  hundred 
dollars  for  each  such  neglect  or  refusal. 

All  persons  acting  as  brokers  between  any  such  agent  or  any  such 
corporation  and  the  assured,  shall,  within  ten  days  after  effecting 
any  insurance  specified  in  section  135,  notify  the  officer  entitled 
to  receive  the  tax  upon  the  premium  upon  such  insurance  of  the 
fact  of  such  insurance,  together  with  the  precise  location  of  the 
property,  the  name  of  the  insurer  and  the  amount  of  the  premium 
to  be  paid  by  the  assured.  Any  broker  willfully  neglecting  or 
refusing  to  comply  with  the  provisions  of  this  section,  shall  be 
liable  to  a  like  action  and  like  penalty  brought  in  the  like  manner 
hereinbefore  provided.  Actions  brought  under  this  section  must 
be  tried  in  the  county  in  which  the  property  alleged  to  be  so 
insured  is  situated. 

All  moneys  received  pursuant  to  this  section  shall  be  appor- 
tioned and  paid  over  in  the  same  manner  as  provided  in  the 
preceding  section  of  this  chapter  for  the  apportionment  and  pay- 
ment of  moneys  received  pursuant  to  such  section  and  under  a 
like  penalty. 

Source.— Former  §  136;  originally  revised  from  L.  1886,  chap.  60,  §  4. 

§  137.    License  to  agents  in  excepted  cases. 

The  superintendent  of  insurance,  in  consideration  of  the  yearly 
payment  of  two  hundred  dollars,  except  in  counties  having  less 
than  one  hundred  thousand  inhabitants,  in  which  case  the  fee  shall 
not  exceed  twenty-five  dollars,  may  issue  to  citizens,  firms  or  cor- 
porations having  places  of  business  in  this  state,  not  exceeding  two 
hundred  in  number,  a  license  revocable  at  any  time,  permitting  the 
party  named  in  such  license  to  act  as  agent  to  procure  policies  of 
fire  insurance  from  corporations,  persons,  partnerships  and  associa- 
tions which  are  not  otherwise  authorized  to  do  business  in  this 
state.  When  any  policies  of  fire  insurance  shall  be  procured  under 
or  by  virtue  of  said  license,  there  shall  be  executed 
by  the  licensed  agent  and  by  the  party  desiring  an 
insurance,     an    affidavit    in     duplicate,     one     of    which     shall 


256  The  Insueance  Law.  §  137. 

be  filed  in  the  insurance  department  and  the  other  in 
the  clerk's  office  of  the  county  in  which  the  property  pro- 
posed to  bo  insured  is  located,  within  thirty  days  after  the  pro- 
curing of  such  insurance.  Such  affidavits  shall  set  forth  that  the 
party  desiring  insurance  is,  after  diligent  effort,  unable  to  procure 
the  amount  required  to  protect  the  property  owned  or  controlled 
by  him  from  the  insurance  corporations  duly  authorized  to  transact 
business  in  this  state.  The  agent  procuring  policies  in  such  unau- 
thorized corporations  or  with  persons,  partnerships  and  associa- 
tions, shall  keep  a  separate  account  thereof,  open  at  all  times  to  the 
inspection  of  the  superintendent,  showing,  first,  the  exact  amount 
of  such  insurance  placed  for  any  party ;  second,  the  gross  premiums 
charged  thereon ;  third,  in  what  corporation,  or  with  what  persons, 
partnerships  or  associations;  fourth,  the  date  of  the  policy;  fifth, 
the  term  thereof,  and  sixth,  the  cities  and  villages  within  this 
state  in  which  the  insured  property  is  located.  Each  party  re- 
ceiving such  license  shall,  before  transacting  business  thereunder, 
execute  and  deliver  to  the  superintendent  a  bond  to  the  people 
of  the  state,  in  the  penal  sum  of  two  thousand  dollars,  with  such 
sureties  as  the  superintendent  shall  approve,  conditioned  that  the 
said  agent  will  faithfully  comply  w^ith  all  the  requirements  of  this 
chapter,  and  will  pay  to  the  treasurer  of  the  Firemen's  Association 
of  the  state  of  New  York,  to  be  expended  for  the  use  and  support 
of  the  Firemen's  Home,  located  at  Hudson,  Columbia  county, 
New  York,  for  the  uses  and  purposes  of  said  association,  or,  where 
such  policies  cover  risks  in  cities  of  over  one  million  inhabitants, 
having  a  fire  patrol  or  salvage  corps,  to  the  treasurer  of  such  fire 
patrol  or  salvage  corps,  in  January  and  July  of  each  year,  a  sum 
equal  to  three  per  cent,  upon  the  amount  of  the  gross  premiums 
charged  to  policy  holders  less  the  amount  of  the  gross  premiums 
returned  to  the  insured  upon  all  policies  procured  by  him  during 
the  preceding  six  months,  pursuant  to  this  article;  and  in  default 
of  payment  to  the  treasurer  of  any  fire  patrol  or  salvage  corps 
of  any  sum  to  which  it  may  be  entitled  pursuant  to  the  pro- 
visions of  this  section,  or  the  treasurer  of  the  said  Firemen's 
Association  of  the  sum  due  them,  the  treasurer  of  said  fire  patrol, 
salvage  corps  or  association  may  sue  for  the  same  in  any  coni't  oi 
record  in  this  state.    All  fire  insurance  policies  issued  to  residents 


§  13T.  Fire  Insurance  Corporation.  257 

of  this  state  on  property  located  herein  by  companies  that  have 
not  complied  with  the  requirements  of  the  general  insurance  laws 
of  the  state  shall  be  void,  except  as  shall  have  been  procured  as 
herein  set  forth. 

Source. — Former  §  137,  as  amended  by  L.  1894,  chap.  611;  originally  revised 
from  L.  1884,  <?hap.  346,  §  4,  as  amended  by  L.  1890,  chap.  552. 

Amended  by  L.  1911,  chap.  322. 

See  §  9,  ante.  No  foreign  corporation  to  transact  business  in  this  state 
without   certificate   of   authorization   by   superintendent. 

See  §  29,  ante.  Copy  of  charter  and  verified  statement  to  be  filed  in  office 
of  superintendent  of  insurance. 

See  §  31,  ante.  Agent  not  to  transact  business  until  certificate  is  filed  in 
county  clerk's  oflfice. 

See  §  32,  ante.     Renewal  of  certificate. 

See  §  49,  ante.  Any  person  aiding  in  the  transaction  of  business  of  foreign 
corporation  is  deemed  an  agent  thereof. 

See  §  50,  ante.    Agent's  certificate  of  authority. 

See  §  53,  ante.    Penalty  for  violation  of  Insurance  Law. 

See  §  54,  ante.    Agents  not  to  act  for  unauthorized  corporations. 

See  §  91,  ante.     Certificate  of  authority  of  agents. 

APPLICATION. —  §  137  relates  entirely  to  fire  insurance  corporations, 
persons,  partnerships  and  associations  which  are  not  authorized  to  do  busi- 
ness in  this  state.     Attorney-General  Rep.,  1896,  page  190. 

A  foreign  fire  insurance  company  should  not  be  permitted  to  execute  a 
contract  without  the  state  of  New  York  which  contains  a  clause  providing 
that  the  policy  shall  not  apply  until  accepted  by  the  insured  by  endorsement 
on  the  face  of  the  policy.    Attorney-General  Rep.,  1906,  page  555. 

Procuring  insurance  from  foreign  corporations  not  admitted  to  do  business 
in  this  state  is  in  violation  of  §  137.  In  re  Johnson  et  al.,  Attorney -General 
Rep.,  1899,  page  197. 

This  section  does  not  apply  to  a  policy  of  insurance,  not  procured  as  set 
forth  in  this  section,  issued  to  a  resident  of  the  state  of  New  York  on 
property  located  in  the  state  of  New  York  by  a  Massachusetts  mutual  fire 
insurance  company  not  authorized  to  do  business  in  the  state  of  New  York, 
where  it  appears  that  the  contract  was  made,  and  was  to  be  performed,  in 
the  state  of  Massachusetts,  and  was  valid  under  the  laws  of  that  state. 
Western  Mass.  Ins.  Co.  v.  Hilton,  42  App.  Div.,  52. 

FOREIGN  LLOYDS. —  Special  agents,  licensed  by  the  superintendent  ot 
the  insurance  department,  cannot,  under  such  license,  place  policies  of  insur- 
ance in  "  Foreign  Lloyds."    Attorney-General  Rep.,  1894,  page  104. 

Residents  of  New  York,  who  have  received  certificates  under  §  137  authoriz- 
ing them  to  write  surplus  lines,  may  place  such  insurance  in  foreign  or  unau- 
thorized Lloyds  without  becoming  liable  under  §  300.  Attorney- General  Rep., 
August  26,  1910. 

This  section  in  relation  to  "  surplus  line  "  does  not  have  the  effect  of  author- 
izing foreign  companies  to  transact  business  in  this  State,  but  allows  brokers 
to  procure  such  insurance  from  a  foreign  country;  when  an  agreement  of  the 


258  The  Insurance  Law.  §  137. 

insured  to  procure  other  insurance  is  conditioned  upon  the  fact  that  the  insurer 
is  not  authorized  to  do  business  in  this  State,  it  cannot  contend  that  it  had  a 
limited  authority  to  do  business  in  this  State,  by  force  of  §  137,  so  as  to  make 
the  contract  one  which  was  perfected  here.  Friedland  v.  Commonwealth  Fire 
Insurance  Co.,  143  App.  Div.,  570. 

AGENTS  OF  INSURED.— Agents  authorized  under  the  provisions  of  the 
Insurance  Law  to  effect  insurance  with  unauthorized  companies,  are  the 
agents  of  the  insured,  and  cannot  act  as  agents  for  the  insuring  companies. 
Attorney-General  Rep.,  1893,  page  388. 

Agents  authorized  under  this  section  to  procure  insurance  are  the  agents  of 
the  insured  and  not  of  the  insurers,  and  where  the  insurance  was  actually  pro- 
cured though  afterwards  cancelled,  the  agent  should  be  required  to  pay  the  tax 
of  three  per  cent.    Attorney-General  Rep.,  Nov.  23,  1910 

INSURANCE  BROKERS. —  Clients  may  properly  suppose  that  an  insurance 
broker  employed  by  them  will  perform  their  duty,  and  will  not,  without 
inquiry,  give  them  a  policy  issued  by  an  insolvent  or  irresponsible  company, 
or  by  one  not  authorized  to  do  business  in  the  state  of  New  York,  and  whose 
policies  have  no  substantial  support  behind  them.  Shepard  v.  Uavis,  42  App. 
Div.,  462. 

WAIVER  BY  AGENT. —  Power  of  agent  to  waive  condition  as  to  othei 
insurance.  Lewis  v.  Guardian  F.  &  L.  Assur.  Co.,  181  N.  Y.,  392;  aff'g  93 
App.  Div.,  157. 

FORFEITURE. —  One  obtaining  a  policy  of  insurance  in  a  foreign  company 
having  no  office  in  this  state,  with  a  clause  forfeiting  the  policy  unless  the 
premium  is  paid  in  a  certain  time  must  go  to  the  company  or  its  duly 
commissioned  agent  and  make  the  payment  within  the  time  specified,  to 
prevent  a  forfeiture.    Redfield  v.  Patterson  Fire  Ins.  Co.,  6  Abb.  N.  C,  456. 

AFFIDAVIT. —  The  affidavit  required  as  a  prerequisite  to  the  effecting  6f 
insurance  with  a  company  not  authorized  to  do  business  in  the  state,  must 
be  made  by  the  owner  or  person  having  control  of  the  property  and  not  by 
his  agent.    In  re  Peaseley,  Attorney-General  Rep.,  1892,  page  320. 

DEPOSITS. —  Deposits  previously  made  by  a  foreign  corporation  under 
§§27  and  28  of  the  Insurance  Law  are  only  held  for  policies  issued  while 
the  company  has  the  right  to  do  business  in  the  state,  and  not  for  policies 
subsequently  issued  by  licensed  agents.  In  re  Helvetia  Swiss  Fire  Ins.  Co., 
Attorney-General  Rep.,  1902,  page  174. 

Insurance  cannot  be  written  unless  at  the  time  of  such  writing  the  property 
ia  actually  located  within  the  limits  of  the  state.  Attorney-General's  Opinion, 
February  24,  1009. 

POLICY  IS  VALID.— The  failure  on  the  part  of  the  Insurance  company 
to  comply  with  the  provisions  of  §§  37  and  137  does  not  render  a  policy 
issued  by  it  void.    Marshall  v.  Reading  Ins.  Co.,  78  Hun,  83. 

A  policy  of  insurance  signed  and  sealed  in  Massachusetts  by  a  corporation 
organized  and  doing  business  in  that  state,  and  mailed  to  the  insured  in  this 
state  pursuant  to  an  order  by  mail,  is  a  Massachusetts  contract  and  not  void 
under  §  137.    Hammond  v.  International  Railway  Co.,  63  Misc.,  437. 

Corporations  are  not  citizens  within  the  meaning  of  this  section.  Attorney- 
General  Rep.,  1905,  page  457. 


.^  138.       Fire  Insurance  Corporation.  259 

LLOYDS. —  Tlie  pinalty  tlue  from  Lloyds  Association  to  tihe  fire  depart- 
ment of  the  city  of  Ni'w  Wnk,  under  title  Vll,  is  not  collectible  by  the  State. 
Att<jrney-t;cMU'raI    Kep..    March  20,    1805. 

A  Lloyds  Association  may  not  be  formed  of  unadmitted  fire  insurance 
companies  with  a  capital  of  not  less  than  $100,000,  all  now  doing  business  in 
tliis  State  a^.  surplus  line  companies  under  licensed  agents,  the  charter  of 
which  is  to  be  secured  by  purchase.    Attorney-General  Rep.,  Oct.  7,  1904. 

§  138.  License  to  persons,  partnerships,  associations  and 
corporations  in  excepted  cases. 

The  superintendent  of  insurance  in  his  discretion  may  issue  to 
any  person,  partnership,  association  or  corporation  complying  with 
the  requirements  of  this  section,  a  certificate  permitting  the  holder 
thereof  to  issue  policies  of  fire  insurance  within  this  state,  upon 
applications  made  to  it  or  them,  under  the  conditions  as  set  forth 
in  section  one  hundred  and  thirty-seven  by  agents  licensed  there- 
under but  not  otherwise. 

Such  certificates  shall  be  granted  only  upon  the  filing  with  the 
superintendent  of  insurance  of  an  application  therefor  signed  and 
acknowledged  by  the  persons,  partnership  or  the  proper  attorneys 
or  officers  of  the  associations  or  corporations  desiring  same  and 
such  applications  shall  contain  the  name  and  address  in  each 
instance  of  the  agent  or  agents  through  whom  the  applicant  pro- 
poses to  conduct  the  business  herein  permitted.  Such  certificate 
when  granted  shall  specify  that  the  insurer  or  insurers  named 
therein  may  issue  in  this  state  policies  of  fire  insurance  through 
the  agent  or  agents  named  in  such  certificates,  upon  the  applicn- 
tion  of  agents  licensed  under  section  one  hundred  and  thirty-seven 
but  not  otherwise.  The  sum  of  twenty-five  dollars  shall  be  paid 
to  the  superintendent  of  insurance  for  each  certificate  so  issued 
and  such  certificate  shall  remain  in  force  for  the  period  of  one 
year  from  the  date  thereof  unless  sooner  revoked  by  the  said 
superintendent,  provided,  however,  that  whenever  the  holder  of 
any  such  certificate  desires  to  substitute  the  name  of  any  new 
agent  in  place  of  the  agent  named  in  the  certificate,  the  super- 
intendent may  if  he  approves  of  the  change,  issue  a  new  certificate 
for  the  unexpired  term  of  the  original  certificate  in  which  shall 
appear  the  name  of  such  agent  so  substituted.  Any  certificate 
granted  under  this  section  shall  be  revoked  upon  proof  to  the 
satisfaction  of  the   said  superintendent  that  the  holder  thereof 


260  The  Insurance  Law.  §  138. 

either  directly  or  througli  any  agent  or  attorney  in  fact  has  tIo- 
lated  any  provision  of  this  chapter,  or  is  in  such  condition  that  the 
further  transaction  of  business  by  it  or  them  would  be  hazardous 
to  the  people  of  the  state. 

Every  policy  issued  in  this  state  by  any  person,  partnership, 
association  or  corporation  to  whom  a  certificate  under  this  section 
shall  be  granted  (a)  shall  be  countersigned  by  the  agent  named  in 
the  certificate;  and  (b)  shall  contain  the  provisions  of  the  standard 
policy  provided  for  by  section  one  hundred  and  twenty-one  of  this 
chapter,  or  an  agreement  that  the  policy  so  issued  shall  be  subject 
to  such  provision  and  that  any  condition  thereof  inconsistent  with 
or  contrary  to  the  provisions  of  the  standard  policy  shall  be  null 
and  void;  and  (c)  shall  contain  a  further  provision  that  service  or 
a  summons  or  other  legal  process  relative  to  any  claim  under  such 
policy  may  be  made  on  the  agent  issuing  or  countersigning  the 
same  and  that  such  service  shall  be  equivalent  to  the  personal 
service  within  this  state  of  such  process  on  the  persons,  associa- 
tions or  corporations  obligated  thereupon;  and  (d)  shall  have 
printed  in  red  ink  upon  the  outside  cover  thereof,  under  the  name 
of  the  corporation  or  association  issuing  the  same,  in  plain  type, 
the  words:  Surplus  line  insurance  only;  this  company  (person, 
partnership  or  association,  as  the  case  may  be)  is  not  under  the 
supervision  of  the  New  York  state  insurance  department;  issued 
by agent,  address 

The  books  and  records  of  every  agent  within  this  state  for  such 
corporations,  persons,  partnerships  and  association  shall  be  open 
at  all  times  to  the  inspection  of  the  superintendent  of  insurance, 
and  must  show,  first  the  exact  amount  of  insurance  written; 
second,  the  gross  premiums  charged  thereon;  third,  the  date  of 
the  policy;  fourth,  the  term  thereof;  fifth,  the  location  of  the 
property;  and,  sixth,  the  names  of  those  licensed  agents  upon 
whose  applications  the  insurance  was  issued. 

Nothing  herein  contained  shall  be  held  to  prevent  any  agent 
licensed  under  the  provisions  of  section  one  hundred  and  thirty - 
seven  from  acting  as  the  agent  of  any  corporation,  person,  part- 
nership or  association  to  whom  a  certificate  has  been  granted 
under  this  section. 

Source.— Former  §  138,  repealed  by  L.  1909,  diap.  286;  added  by  L.  1911, 
chap.  322. 


§  138-a.      Fire  Insurance  Corporation.  261 

§  138-a    Public  adjusters;  certificate  of  authority. 

The  term  "  public  adjuster "  in  this  section  shall  include 
every  person,  partnership,  association  or  corporation  advertising, 
soliciting  business  or  holding  himself  or  itself  out  to  the  public 
as  an  adjuster  of  loss  or  damage  by  fire,  or  receiving  any  com- 
pensation or  reward  for  the  giving  of  advice  or  assistance  to  the 
assured  in  the  adjustment  of  claims  for  loss  or  damage  by  fire, 
and  all  persons  who  for  compensation  or  reward,  whether  by  way 
of  salary  or  commission  or  otherwise,  solicit  business,  investigate 
or  adjust  losses  or  advise  the  assured  with  reference  to  claims  for 
loss  or  damage  by  fire,  on  behalf  of  any  other  person,  partner- 
ship, association  or  corporation  engaged  in  the  business  of  adjust- 
ing loss  or  damage  by  fire. 

No  person,  partnership,  association  or  corporation  shall  act  as  a 
public  adjuster,  or  receive  for  or  because  of  services  rendered  in 
the  adjustment  of  any  claim  or  claims  for  loss  or  damage  by  fire 
under  a  policy  or  policies  of  insurance  upon  property  within  this 
state,  any  money  or  commission  or  other  thing  of  value,  without 
first  procuring  a  certificate  of  authority  to  act  as  a  public  adjuster 
from  the  superintendent  of  insurance. 

The  superintendent  of  insurance  shall  issue  adjusters'  certifi- 
cates of  authority  to  persons,  partnerships,  associations  or  corpo- 
rations, applying  therefor,  whom  he  deems  to  be  trustworthy  and 
competent  to  transact  business  as  public  adjusters  in  such  manner 
as  to  safeguard  the  interests  of  the  public. 

A  certificate  of  authority  issued  to  a  corporation,  partnership  or 
association  shall  authorize  only  the  ofiicers  and  directors  of  the 
corporation,  or  the  members  of  the  partnership  or  association, 
specified  in  the  certificate.  The  fee  to  be  paid  to  the 
superintendent  of  insurance  by  the  applicant  for  such  adjuster's 
certificate  at  the  time  the  application  is  made,  and  annually  for 
the  renewal  thereof,  shall  be  twenty-five  dollars.  If  the  applicant 
be  a  corporation,  partnership  or  association  such  fee  shall  be  paid 
for  each  person  specified  in  the  certificate. 

Every  adjuster's  certificate  of  authority  shall  expire  on  the 
thirty-first  day  of  December  of  the  calendar  year  in  which  the  same 
shall  have  been  issued,  but  if  an  application  for  the  renewal  of  any 
such  certificate  shall  have  been  filed  with  the  superintendent  of 
insurance  before  January  first  of  any  year  the  certificate  of  author- 
ity sought  to  be  renewed  shall  continue  in  full  force  and  effect 
until  the  issuance  by  the  superintendent  of  insurance  of  the  new 


262  The  Insurance  Law.  §  138-a. 

certificate  applied  for  or  until  five  days  after  the  superintendent  of 
insurance  shall  have  refused  to  issue  such  new  certificate  and  shall 
have  served  notice  of  such  refusal  on  the  applicant  therefor.  Serv- 
ice of  such  notice  may  be  made  either  personally  or  by  mail,  and, 
if  by  mail,  shall  be  deemed  complete  if  such  notice  is  deposited  in 
the  post-office  postage  prepaid,  directed  to  the  applicant  at  the 
place  of  business  specified  in  the  application. 

Before  any  adjuster's  certificate  of  authority  shall  be  issued  by 
the  superintendent  of  insurance  there  must  be  filed  in  his  office  a 
written  application  therefor.  Such  application  shall  be  in  the 
form  or  forms  and  supplements  thereof  prescribed  by  the  superin- 
tendent of  insurance  and  must  set  forth  (1)  the  name  and  address 
of  the  applicant,  and  if  the  applicant  be  a  partnership  or  associa- 
tion, the  name  and  address  of  each  member  thereof,  and  if  the 
applicant  be  a  corporation,  the  name  and  address  of  each  of  its 
officers  and  directors;  (2)  whether  any  certificate  of  authority  as 
agent,  broker  or  adjuster  has  been  issued  theretofore  by  the  super- 
intendent of  insurance  to  the  applicant,  and,  if  the  applicant  be  an 
individual,  whether  any  such  certificate  has  been  issued  thereto- 
fore to  any  partnership  or  association  of  which  he  was  or  is  a 
member  or  to  any  corporation  of  which  he  was  or  is  an  officer  or 
director,  and,  if  the  applicant  be  a  partnership  or  association, 
whether  any  such  certificate  has  been  issued  theretofore  to  any 
member  thereof,  and,  if  the  applicant  be  a  corporation,  whether 
any  such  certificate  has  been  issued  theretofore  to  any  officer  or 
director  of  such  corporation;  (3)  the. business  in  which  the  appli- 
cant has  been  engaged  for  the  year  next  preceding  the  date  of  the 
application,  and,  if  employed  by  another,  the  name  or  names  and 
address  or  addresses  of  such  employer  or  employers;  (4)  such 
information  as  the  superintendent  of  insurance  may  require  of 
applicants  to  enable  him  to  determine  their  trustworthiness  and 
competency  to  transact  the  business  of  adjuster  in  such  manner 
as  to  safeguard  the  interests  of  the  public. 

An  application  for  an  adjuster's  certificate  of  authority  must  be 
signed  and  verified  by  the  applicant  and,  if  made  by  a  partnership 
or  association,  by  each  member  thereof  and  if  made  by  a  corpora- 
tion by  each  officer  and  director  thereof  to  be  authorized  thereby 
to  act  as  an  adjuster. 


§  13i8-a.  Fire  Insukance  Corporation.  263 

A  corporation,  association  or  partnership  to  which  a  certificate 
of  authority!  shall  have  been  issued  by  the  superintendent  of 
insurance  under  this  section  may  at  any  time  make  an  application 
to  tlie  superintendent  of  insurance  for  the  issuance  of  a  supple- 
mental certificate  of  authority  authorizing-  additional  officers  or 
directors  of  the  corporation  or  members  of  the  partnership  or 
association  to  act  as  adjusters,  and  the  superintendent  of  insur- 
ance may  thereupon  issue  to  such  corporation,  association  or  part- 
nership a  supplemental  certificate  accordingly  upon  the  payment 
of  an  additional  fee  for  each  member  or  officer  or  director  thereby 
authorized  to  act  as  an  adjuster. 

A  certificate  issued  under  this  section  shall  be  revoked  by  the 
superintendent,  if,  after  due  investigation,  he  determines  that  the 
holder  of  such  certificate  (1)  has  violated  any  provision  of  this 
chapter;  or  (2)  has  made  a  material  misstatement  in  the  applica- 
tion for  such  certificate;  or  (3)  has  been  guilty  of  fraudulent 
practices;  or  (4)  has  demonstrated  his  incompetency  or  untrust- 
worthiness  to  transact  the  business  of  a  public  adjuster. 

If  an  application  for  a  certificate  of  authority  under  this  section 
bfe  rejected  or  such  a  certificate  be  revoked  by  the  superintendent 
of  insurance  notice  thereof  shall  forthwith  be  served  on  the  appli- 
cant or  on  the  holder  of  such  certificate  either  personally  or  by 
mail,  and,  if  by  mail,  such  service  shall  be  complete  if  such  notice 
be  deposited  in  the  post-office  postage  prepaid,  directed  to  the  appli- 
cant or  the  holder  of  such  certificate,  as  the  case  may  be,  at  the 
place  of  business  specified  in  the  application  or  certificate. 

This  section  shall  not  apply  to  an  agent  or  employee  of  an  under- 
writer by  whom  a  policy  of  insurance  against  loss  or  damage  by 
fire  shall  have  been  written  upon  property  within  this  state,  in 
adjusting  loss  or  damage  under  such  policy  nor  to  a  broker  acting 
as  adjuster  without  compensation  for  a  client  for  whom  he  is 
acting  as  broker,  nor  to  contracts  made  by  persons,  partnerships, 
associations  or  corporations  authorized  to  do  business  under  article 
nine  of  this  chapter. 

Any  person,  partnership,  association  or  corporation  violating 
any  of  the  provisions  of  this  section  shall,  in  addition  to  any  other 
penalty  in  this  chapter  provided,  forfeit  to  the  people  of  the  state 
five  hundred  dollars'. 

Added  by  L.  1913,  chap.  22. 

Amended  by  L.  1913,  chap.  522,  and  L.  1914,  chap.  108.  In  effect  April  3, 
1914. 


264  The  Insurance  Law.  §  130, 

Note. — The  purpose  of  tlie  addition  of  this  section  by  chapter  22  of  1913 
was  to  require  adjusters  of  loss  or  damage  by  fire  to  procure  a  certificate  of 
authority  from  the  superintendent. — Ed. 

The  purpose  of  the  amendment  of  this  section  by  chapter  108  of  1914  was 
to  give  the  Superintendent  of  Insurance  absolute  discretion  in  the  matter  of 
licensing  public  adjusters  of  loss  or  damage  by  fire,  and  to  take  away  the 
right  to  a  writ  of  certiorari  to  review  the  action  of  the  Superintendent  of 
Insurance,  provided  for  in  the   present  law. 

In  an  action  to  recover  for  services  in  adjusting  a  fire  insurance  claim  for 
defendants,  there  can  be  no  recovery  for  such  part  of  the  services  as  were 
rendered  before  plaintiff  procured  a  certificate  of  authority  to  act  as  a  ''  public 
adjuster,",  even  though  after  plaintiff  had  procured  his  license  defendants 
promised  to  pay  for  the  services  rendered.  Stake  &  'Co.,  Inc.,  v.  Koth,  91 
Misc.,  45. 


§  139.  Organizations  for  assisting  underwriters  in  insurance 
business  generally. 

Every  corporation,  association,  bureau  or  board  which  now 
exists  or  hereafter  may  be  formed,  and  every  person  who  maintains 
or  hereafter  may  maintain  a  bureau  or  office,  located  within  or 
without  this  state,  for  the  purpose  of  inspecting  risks,  adjusting 
losses,  testing  appliances,  formulating  rules  or  establishing  stand- 
ards for  the  information  or  benefit  of  underwriters  in  the  trans- 
action within  this  state  of  the  business  of  insurance  and  which 
corporation,  association,  bureau  or  person  receives  contributions 
from  or  is  financially  aided  directly  or  indirectly,  wholly  or 
partially  or  in  any  manner  by  any  person,  association  or  corpora- 
tion authorized  to  transact  the  business  of  insurance  within  this 
state,  shall  file  on  demand  with  the  superintendent  of  insurance  a 
copy  of  the  articles  of  agreement,  association  or  incorporation  and 
the  by-laws  and  all  amendments  thereto  under  which  such  person, 
association,  corporation,  board  or  bureau  operates  or  proposes  to 
operate,  together  with  his  or  its  business  address  as  well  as  such 
other  information  concerning  such  organization  and  its  operation 
as  may  be  required  by  the  superintendent.  Every  such  person, 
corporation,  association,  bureau  or  board,  whether  before  or  after 
filing  of  the  information  specified  in  the  last  preceding  paragraph, 
shall  be  subject  to  the  visitation  and  examination  of  the 
superintendent  of  insurance,  who  shall  cause  to  be  made  an  ex- 
amination thereof  whenever  he  deems  it  expedient.  For  this 
purpose  he  may  appoint  as  examiners  one  or  more  competent  per- 
sons, and  upon  such  examinations,  he,  his  deputy  or  any  examiner 
authorized  by  him  shall  have  all  the  powers  given  to  the  superin- 


§  140.  Fire  Insurance  Corporation.  265 

tendent,  his  deputy  or  any  examiner  authorized  by  him  by  section 
thirty-nine  of  this  chapter,  including  the  power  to  examine  under 
oath  the  officers  or  agents  and  all  persons  deemed  to  have  material 
information  regarding  the  business  of  or  manner  of  operation 
by  every  such  person,  corporation,  association,  bureau  or  board. 
No  person,  association  or  corporation  authorized  to  transact  the 
business  of  insurance  within  this  state  shall  be  a  member  or  sub- 
scriber to  any  corporation,  association,  bureau,  board  or  person 
referred  to  in  this  section  nor  shall  it  contribute  to  or  financially 
aid  any  such  corporation,  association,  bureau,  board  or  person 
who  shall  fail  to  comply  with  the  provisions  of  this  section.  Upon 
notice  furnished  by  the  superintendent  of  insurance  every  per- 
son, association  or  corporation  authorized  to  transact  the  business 
of  insurance  within  this  state,  shall  terminate  immediately  its 
subscription  or  membership  and  shall  cease  to  make  further  con- 
tributions directly  or  indirectly  or  in  any  manner  to  such  cor- 
poration, association,  bureau,  board  or  person. 

This  section  shall  not  apply  to  any  contract  of  life  insurance, 
nor  to  any  contract  of  insurance  upon  or  in  connection  with 
marine  or  transportation  risks  or  hazards  other  than  contracts  for 
automobile  insurance,  nor  to  contracts  of  insurance  upon  prop- 
erty or  risks  located  without  this  state,  nor  to  contracts  made  by 
persons,  partnerships,  associations  or  corporations  authorized  to 
do  business  under  articles  five,  six,  seven  and  nine  of  this  chap- 
ter, but  it  shall  apply  to  all  other  forms  of  insurance  mentioned 
in  any  article  of  this  chapter. 

'  Source.— Former  §  139,  repealed  by  L.  1909,  chap.  286. 

Added  by  L.  1913,  chap.  23. 

Note. — The  purpose  of  the  addition  of  this  section  by  chapter  23  of  1913 
was  to  bring  under  the  supervision  of  the  insurance  department  all  corpora- 
tions, associations,  bureaus,  etc.,  which  are  conducted  for  the  purpose  of  in- 
specting risks,  adjusting  losses,  testing  appliances,  formulating  rules,  or  estab- 
lishing standards  for  the  information  or  benefit  of  underwriters. — Ed. 

§  140.  Organizations  for  assisting  in  establishing  insurance 
rates. 

Every  corporation,  association,  bureau  or  board  which  now 
exists  or  hereafter  may  be  formed,  and  every  person  who  maintains 
or  hereafter  may  maintain  a  bureau  or  office,  for  the  purpose  of 
assisting  any  underwriting  corporation,  association,  bureau  or  per- 
son in  formulating,  fixing,  promulgating,  applying  or  maintaining 
a  rate  on  property  or  risks  of  any  kind  located  in  this  state,  shall 


266  The  Insurance  Law.  §  141. 

file  with  the  superintendent  of  insurance  a  copy  of  the  articles  of 
agreement,  association  or  incorporation  and  the  by-laws  and  all 
amendments  thereto  under  which  such  person,  association,  bureau 
or  board  operates  or  proposes  to  operate,  together  with  his  or  its 
business  address,  as  well  as  such  other  information  concerning 
such  organization  and  its  operations  as  may  be  required  by  the 
superintendent.  Every  such  person,  corporation,  association, 
bureau  or  board,  whether  before  or  after  filing  of  the  information 
specified  in  the  last  preceding  paragraph,  shall  be  subject  to  the 
visitation,  supervision  and  examination  of  the  superintendent  of 
insurance,  who  shall  cause  to  be  made  an  examination  thereof  as 
often  as  he  deems  it  expedients  For  this  purpose  he  may  appoint 
as  examiners  one  or  more  competent  persons,  and  upon  such  ex- 
amination, he,  his  deputy  or  any  examiner  authorized  by  him 
shall  have  all  the  powers  given  to  the  superintendent,  his  deputy 
or  any  examiner  authorized  by  him  by  section  thirty-nine  of  this 
chapter,  including  the  power  to  examine  under  oath  the  officers  or 
agents  and  all  persons  deemed  to  have  material  information  re- 
garding the  business  of  or  manner  of  operation  of  every  such 
person,  corporation,  association,  bureau  or  board. 

This  section  shall  not  apply  to  any  contract  of  life  insurance, 
nor  to  any  contract  of  insurance  upon  or  in  connection  with 
marine  or  transportation  risks  or  hazards  other  than  contracts  for 
automobile  insurance,  nor  to  contracts  of  insurance  upon  property 
or  risks  located  without  this  state,  nor  to  contracts  made  by  per- 
sons, partnerships,  associations  or  corporations  authorized  to  do 
business  under  articles  ^ve,  six,  seven  and  nine  of  this  chapter, 
but  it  shall  apply  to  all  other  forms  of  insurance  mentioned  in 
any  article  of  this  chapter. 

Source.— Former  §  140,  repealed  by  L.  1909,  diap.  286. 

Added  by  L.  1913,  chap.  21. 

Note. — The  purpose  of  the  addition  of  this  section  by  chapter  21  of  1913  was 
to  bring  under  supervision  of  department  all  bodies  which  are  maintained 
for  the  purpose  of  assisting  underwriting  organizations  in  fixing,  formulating, 
promulgating,  applying  or  maintaining  rates. — Ed. 

§  141.    Rate-making  associations. 

Every  corporation,  association  or  bureau  which  now  exists  or 
hereafter  may  be  formed,  and  every  person  who  maintains  or 
hereafter  may  maintain  a  bureau  or  office,  for  the  purpose  of 
suggesting,  approving  or  making  rates  to  be  used  by  more  than 
one  underwriter  for  insurances,  including  surety  bonds,  on  prop- 
erty or  risks  of  any  kind  located  in  this  state,  shall  file  with  the 


§  141.  FiEE  Insukance  Corporation.  267 

superintendent  of  insurance  a  copy  of  the  articles  of  agreement, 
association  or  incorporation  and  the  by-laws  and  all  amendments 
thereto  under  which  such  person,  association  or  bureau  operates 
or  proposes  to  operate,  together  with  his  or  its  business  address 
and  a  list  of  the  members  or  insurance  corporations  repre- 
sented or  to  be  represented  by  him  or  it,  as  well  as  such  other 
information  concerning  such  rating  organization  and  its  opera- 
tions as  may  be  required  by  the  superintendent. 

Every  such  person,  corporation,  association  or  bureau,  whether 
before  or  after  the  filing  of  the  information  specified  in  the  last 
preceding  paragraph,  shall  be  subject  to  the  visitation,  supervision 
and  examination  of  the  superintendent  of  insurance,  who  shall 
cause  to  be  made  an  examination  thereof  as  often  as  he  deems  it 
expedient  and  at  least  once  in  three  years.  For  such  purpose 
he  may  appoint  as  examiners  one  or  more  competent  persons,  and 
upon  such  examination,  he,  his  deputy  or  any  examiner  author- 
ized by  him  shall  have  all  the  powers  given  to  the  superintendent, 
his  deputy  or  any  examiner  authorized  by  him  by  section  thirty- 
nine  of  this  chapter,  including  the  power  to  examine  under  oath 
the  ofiicers  or  agents  and  all  persons  deemed  to  have  material  in- 
formation regarding  the  business  of  or  manner  of  operation  by 
every  such  person,  corporation,  association,  bureau  or  board.  The 
superintendent  shall  make  public  the  results  of  such  examination 
and  shall  report  to  the  legislature  in  his  annual  report  on  the 
methods  of  such  rating  organization  and  the  manner  of  its 
operation. 

Each  such  person,  corporation,  association  or  bureau  shall 
file  with  the  superintendent  of  insurance  whenever  he  may  call 
therefor  any  and  every  schedule  of  rates  or  such  other  infor- 
mation concerning  such  rates  as  may  be  suggested,  approved  or 
made  by  any  such  rating  organization  for  the  purposes  specified 
in  the  first  paragraph  of  this  section. 

1^0  such  person,  corporation,  association  or  bureau  shall  fix  or 
make  any  rate  or  schedule  of  rates  which  is  to  or  may  apply  to 
any  risk  within  this  state,  on  the  condition  that  the  whole  amount 
of  insurance  on  such  risk  or  any  specified  part  thereof  shall  be 
placed  at  such  rates,  or  with  the  members  of  or  subscribers  to 
such  rating  organization;  nor  shall  any  such  person,  corporation, 
association  or  bureau,  or  any  person,  association  or  corporation 
authorized  to  transact  the  business  of  insurance  within  this  state, 
fix  or  make  any  rate  or  schedule  of  rates  or  charge  a  rate  which 
discriminates  unfairly  between  risks  within  this  state  of  essen- 


268  The  Insurance  Law.  §  141. 

tiallj  the  same  hazard  or,  if  such  rate  be  a  fire  insurance  rate, 
which  discriminates  unfairly  between  risks  in  the  application  of 
like  charges  or  credits  or  which  discriminates  unfairly  between 
risks  of  essentially  the  same  hazards  and  having  substantially  the 
same  degree  of  protection  against  fire.  Whenever  it  is  made  to 
appear  to  the  satisfaction  of  the  superintendent  of  insurance  that 
such  discrimination  exists,  he  may,  after  a  full  hearing  either 
before  himself  or  before  any  salaried  employee  of  the  insurance 
department  whose  report  he  may  adopt,  order  such  discrimina- 
tion removed;  and  all  such  persons,  corporations,  associations  or 
bureaus  affected  thereby  shall  immediately  comply  therewith; 
nor  shall  such  persons,  corporations,  associations  or  bureaus  re- 
move such  discrimination  by  increasing  the  rates  on  any  risk 
or  class  of  risks  affected  by  such  order  unless  it  is  made  to 
appear  to  the  satisfaction  of  the  superintendent  of  insurance  that 
such  increase  is  justifiable. 

No  such  person,  corporation,  association  or  bureau  or  any 
other  person,  corporation,  association  or  bureau,  shall  charge  any. 
licensing,  registration,  certification  or  membership  fee  to  brokers 
who  shall  have  been  or  hereafter  may  be  licensed  or  authorized 
as  such  pursuant  to  the  provisions  of  this  chapter;  nor  shall  any 
such  rating  organization  or  any  other  person,  corporation,  asso- 
ciation or  bureau  or  any  two  or  more  persons,  associations 
or  corporations  authorized  to  transact  the  business  of  in- 
surance within  this  state,  acting  in  agreement,  refuse  to  do  busi- 
ness with  or  to  pay  commissions  to  any  person  who  may  be 
licensed  or  authorized  as  an  insurance  broker,  pursuant  to  the 
provisions  of  this  chapter,  because  such  a  broker  will  not  agree 
to  secure  insurance  only  at  the  rates  of  premium  fixed  by  such 
rating  organization  or  the  parties  to  such  agreement. 

Every  such  rating  organization  shall  keep  a  careful  record  of 
its  proceedings  and  shall  furnish  upon  demand  to  any  person 
upon  whose  property  or  risk  a  rate  has  been  made,  or  to  his 
authorized  agent,  full  information  as  to  such  rate,  and,  if  such 
property  or  risk  be  rated  by  a  schedule,  a  copy  of  such  schedule; 
it  shall  also  provide  such  means  as  may  be  approved  by  the 
superintendent  of  insurance  whereby  any  person  or  persons 
affected  by  such  rate  or  rates  may  be  heard,  either  in  person  or 
by  agent,  before  the  governing  or  rating  committee  or  other 
proper  executive  of  such  rating  organization  on  an  application 
for  a  change  in  such  rate  or  rates. 


§   142.  Fire  Ixsueance  Corporation.  269 

This  section  shall  not  apply  to  any  contract  of  life  insurance, 
nor  to  any  contract  of  insurance  upon  or  in  connection  with 
marine  or  transportation  risks  or  hazards  other  than  contracts 
for  automobile  insurance,  nor  to  contracts  of  insurance  upon 
property  or  risks  located  without  this  state,  nor  to  contracts  made 
by  persons,  partnerships,  associations  or  corporations  authorized 
to  do  business  under  articles  iive,  six,  seven  and  nine  of  this 
chapter,  but  it  shall  apply  to  all  other  forms  of  insurance  men- 
tioned in  any  article  of  this  chapter. 

Source.— Former  §  141,  repealed  by  L.  1909,  chap.  286. 

Added  by  L.  1911,  chap.  460,  amended  by  L.  1912,  chap.  175,  and  L.  1913, 
chap.  26. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  26  of  1913 
was  to  enlarge  the  supervision  of  the  superintendent  in  relation  to  examina- 
tion of  rate  making  associations,  giving  him  powers  he  formerly  had  in  con- 
nection with  the  examination  of  insurance  companies,  and  to  give  better  pro- 
tection to  the  insured  in  regard  to  fixing  and  maintaining  rates  or  schedules 
of  rates. — Ed. 

§  142.    Agent's  certificate  of  authority. 

The  term  '^  agent  "  in  this  section  shall  include  an  acknowledged 
agent  or  any  person,  partnership,  association  or  corporation  who 
shall  in  any  manner  aid  in  transacting  the  insurance  business  of 
any  underwriter,  incorporated  or  unincorporated,  by  negotiating 
for  or  placing  risks  or  delivering  policies  or  collecting  premiums, 
but  shall  not  include  the  officers  and  salaried  employees  of  any 
such  underwriter,  who  do  not  receive  commissions.  Every  under- 
writer, incorporated  or  unincorporated,  engaged  in  the  transaction 
of  any  business  of  insurance  within  this  state,  upon  the  employ- 
ment or  termination  of  the  employment  of  any  person,  partner- 
ship, association  or  corporation  to  act  as  its  agent  within  this  state, 
shall  certify  such  fact  together  with  the  name  and  address  of  such 
agent  to  the  superintendent  of  insurance ;  and  shall  also  annually 
during  the  month  of  January,  in  such  form  as  the  superintendent 
of  insurance  shall  prescribe,  file  with  him  a  list  of  the  names  and 
addresses  of  all  its  agents  authorized  to  act  as  such  within  the 
state.  1^0  person,  partnership,  association  or  corporation  shall  as 
agent  act  for  any  such  underwriter  in  this  state,  unless  such  under- 
writer shall  have  fully  complied  with  the  provisions  of  this 
chapter  nor  unless  such  agent  shall  have  procured  an  agent's  cer- 
tificate of  authority  from  the  superintendent  of  insurance.  The 
superintendent  of  insurance  shall  file  in  his  ofiice  evidence  of  the 
issuance  of  every  such  certificate  to  an  agent,  together  with  evi- 


270  The  Insurance  Law.  §  142. 

dence  of  such  agent's  authority  from  each  underwriter  for  whom 
he  is  to  act.  An  agent's  certificate  of  authority  shall  be  issued 
only  upon  application  filed  with  the  superintendent  of  insurance, 
in  such  form  as  the  superintendent  of  insurance  shall  prescribe. 
Every  such  certificate  shall  expire  on  the  thirty-first  day  of 
December  of  the  calendar  year  in  which  the  same  shall  have  been 
issued,  but  if  the  application  for  the  renewal  of  any  such  certifi- 
cate shall  have  been  filed  with  the  superintendent  of  insurance 
before  January  first  of  any  year  such  agent  may  continue  to  act 
as  such  under  such  expired  certificate  until  the  issuance  to  him 
by  the  superintendent  of  insurance  of  a  new  certificate  or  until 
five  days  after  the  superintendent  of  insurance  shall  have  refused 
to  renew  such  certificate  and  shall  have  served  notice  of  such  re- 
fusal on  such  agent.  Service  of  such  notice  may  be  made  either 
personally  or  by  mail,  and,  if  by  mail,  shall  be  deemed  complete  if 
such  notice  is  deposited  in  the  post  office,  postage  prepaid,  directed 
to  the  applicant  at  the  place  of  residence  or  business  specified  in 
his  application.  An  underwriter,  authorized  to  transact  the  in- 
surance business  within  this  state,  who  shall  employ  as  agent 
any  person,  partnership,  association  or  corporation  not  having  an 
agent's  certificate  of  authority  from  the  superintendent  of  insur- 
ance authorizing  him  to  act  as  agent  shall  not  authorize  or  permit 
such  agent  under  his  contract  of  employment  to  solicit  insurance 
or  issue  policies  for  such  underwriter  until  such  agent  shall  have 
procured  a  certificate  of  authority  as  required  by  this  section. 
An  agent's  certificate  of  authority  shall  be  revoked,  or  the  issue  or 
renewal  thereof  refused,  by  the  superintendent  of  insurance  if, 
after  due  investigation  and  a  hearing  either  before  himself  or 
before  any  salaried  employee  of  the  insurance  department  desig- 
nated by  him  whose  report  he  may  adopt,  he  determines  that  the 
holder  of  such  certificate,  or  the  applicant  therefor,  as  the  case 
may  be,  has  violated  any  provision  of  this  chapter,  or  has  been 
guilty  of  fraudulent  practices.  No  individual,  corpora- 
tion, partnership  or  association  whose  certificate  of  au- 
thority is  so  revoked,  nor  any  partnership,  or  association 
of  which  such  individual  is  a  member,  nor  any  cor- 
poration of  which  he  is  an  officer,  shall  be  entitled  to  any 
certificate  of  authority  under  this  section  for  one  year  after  such 
revocation,  or,  if  such  revocation  be  reviewed  by  certiorari  pro- 
ceedings, for  one  year  after  the  final  determination  thereof  affirm- 
ing the  action  of  the  superintendent  in  revoking  such  certificate. 
If  any  such  certificate  held  by  a  partnership,  association  or  cor- 


§  142.  Fire  Insurance  Corporation.  271 

poration  be  so  revoked,  no  member  of  the  partnership  or  associa- 
tion or  officer  of  the  corporation  shall  be  entitled  to  any  such 
certificate  for  the  same  period  of  time,  if  the  superintendent  of 
insurance  determine  that  such  member  or  officer  was  personally 
at  fault  in  the  matter  on  account  of  which  the  certificate  was  re- 
voked. The  action  of  tlie  superintendent  of  insurance  in  grant- 
ing or  refusing  to  grant  or  renew  a  certificate  of  authority  or  in 
revoking  or  refusing  to  revoke  such  certificate  under  this  section 
shall  be  subject  to  review  by  writ  of  certiorari,  at  the  instance  of 
the  applicant  for  such  certificate,  the  holder  of  a  certificate  so  re- 
voked or  the  holder  of  any  certificate  or  the  person  aggrieved.  If 
the  superintendent  of  insurance  shall  revoke  or  shall  refuse  to 
renew  the  certificate  of  authority  of  any  agent  issued  under  this 
section  and  such  agent  shall  apply  for  a  writ  of  certiorari  to  re- 
view such  action,  the  certificate  of  authority  of  such  agent  shall 
be  deemed  to  be  in  full  force  and  effect  for  all  purposes  including 
the  right  to  renewal  until  the  final  determination  of  such  cer- 
tiorari proceedings  and  all  appeals  therefrom. 

This  section  shall  not  apply  to  any  contract  of  life  insurance, 
nor  to  any  contract  of  health  or  accident  insurance  nor 
to  any  contract  of  insurance  upon  or  in  connection  with 
marine  or  transportation  risks  or  hazards  other  than  contracts  for 
automobile  insurance,  nor  to  contracts  of  insurance  upon  prop- 
erty located  without  this  state,  nor  to  contracts  made  by  persons, 
partnerships,  associations  or  corporations  authorized  to  do  busi- 
ness under  articles  -^ve,  six,  seven  and  nine  of  this  chapter. 

Any  person,  partnership,  association  or  corporation  violating 
any  provision  of  this  section  shall,  in  addition  to  any  other 
penalty  in  this  chapter  provided,  forfeit  to  the  people  of  the  state 
five  hundred  dollars. 

I^othing  in  this  chapter  shall  be  so  construed  as  to  prevent  any 
underwriter  authorized  to  do  business  within  this  state  from  au- 
thorizing a  broker  to  whom  a  certificate  of  authority  has  been 
issued  under  this  chapter  to  act  as  agent  of  such  underwriter  for 
the  collection  of  premiums. 

Added  by  L.  1913,  chap.  7. 

Amended  by  L.   1914,  diap.   13.     In  effect  July   1,  1914. 

The  purpose  of  the  amendment  of  this  section  by  chapter  13  of  1914  was  to 
broaden  the  powers  of  the  Superintendent  so  as  to  permit  bim  to  reject 
applications  for  agents'  certificates.  Tbe  law  provided  that  the  Superin- 
tendent had  tbe  right  to  revoke  a  license  whicb  had  already  been  issued, 
after  due  investigation  and  a  bearing,  but  he  had  not  the  right  to  exclude 
unworthy  applicants  for  licenses  by  the  same  means.    The  amendment  also 


272  The  Ixsueance  Law.  §  143. 

exempts  agents  of  health  and  accident  companies  from  the  operation  of  this 
section;  conditions  in  the  health  and  accident  agency  field  requiring  special 
treatment,  which  are  provided  for  by  new  section  91-a. 

Source.— Former  §  138,  as  added  by  L.  1905,  chap.  566.  Former  §  142,  added 
by  L.  1911,  chap.  748,  as  amended  by  L.  1912,  chaps.  1,  172,  repealed  by  L. 
1913,  chap.  7. 

UNCONSTITUTIONAL.— Section  142  inserted  by  chapter  748  of  1911,  as 
amended  by  chapter  1  of  1912,  the  purpose  of  which  is  to  confine  the  business 
of  brokers  in  procuring  insurance  to  those  who  should  make  their  principal 
business,  or  who  should  be  real  estate  agents  or  brokers,  is  unconstitutional. 
Hauser  v.  North  British  &  Mer.  Ins.  Co.,  206  N.  Y.,  455,  afi'g  152  App.  Div.,  91. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  7  of  1913 
was  to  make  it  applicable  to  agents  only,  providing  for  the  revocation  of  an 
agent's  certificate  of  authority  after  due  investigation  and  a  hearing;  the 
brokers  are  now  brought  in  under  a  separate  section. — Eki. 

§  143.    Broker's  certificate  of  authority. 

The  term  "  broker  "  in  this  section  shall  include  any  person, 
partnership,  association  or  corporation  who,  for  money,  commis- 
sion or  anything  of  value,  acts  or  aids  in  any  manner  on  behalf 
of  the  insured  in  negotiating  contracts  of  insurance  or  placing 
risks  or  taking  out  insurances,  including  surety  bonds.  'No  under- 
writer, authorized  or  permitted  to  do  business  in  this  state,  or 
agent  thereof,  shall  pay  any  money  or  commission  or  give  or  allow 
anything  of  value  to  any  person,  partnership,  association  or  cor- 
poration not  a  duly  authorized  agent  of  such  underwriter  for  or 
because  of  his  or  its  negotiating  a  contract  of  insurance  or  placing 
a  risk  or  taking  out  insurance  or  a  surety  bond,  unless  such  person, 
partnership,  association  or  corporation  is  authorized  to  act  as  a 
broker.  No  person,  partnership,  association  or  corporation  shall 
act  as  broker  in  the  solicitation  or  procurement  of  applications 
for  insurance  or  receive  for  or  because  of  negotiating  a  contract 
of  insurance  or  placing  a  risk  or  taking  out  insurance  including 
a  surety  bond  any  money  or  commission  or  other  thing  of  value 
from  any  underwriter  authorized  or  permitted  to  do  an  insurance 
business  in  this  state,  or  from  an  agent  of  any  such  underwriter, 
without  first  procuring;  a  certificate  of  authority  so  to  act  from 
the  superintendent  of  insurance. 

The  superintendent  of  insurance  shall  issue  such  broker's  cer- 
tificate of  authority  to  a  person,  partnership,  association  or  corpo- 
ration, applying  therefor,  who  is  trustworthy  and  is  competent  to 
transact  an  insurance  brokerage  business  in  such  manner  as  to 
safeguard  the  interests  of  the  insured. 


§  143.  Fire  Insurance  Corpotiation.  273 

A  certificate  of  authority  issued  to  a  corporation,  partnership 
or  association  shall  authorize  only  the  officers  and  directors  of  the 
corporation,  or  the  members  of  the  partnership  or  association, 
specified  in  the  certificate,  each  of  whom  must  be  qualified  to 
obtain  a  certificate  to  act  a-  a  l^rokor,  and  for  each  of  whom  a 
fee  must  be  paid  at  the  times  and  at  the  rates  specified  for  indi- 
vidual applicants.  The  fee  to  be  paid  to  the  superintendent  of 
insurance  by  an  individual  applicant  for  such  broker's  certificate 
at  the  time  the  application  is  made,  and  annually  for  the  renewal 
thereof,  shall  be  ten  dollars,  if  the  applicant  maintains  a  place  of 
business  or  customarily  solicits  business  in  a  city  of  the  first  class ; 
seven  dollars  and  fifty  cents,  if  the  applicant  maintains  a  place 
of  business  or  customarily  solicits  business  in  a  city  of  the  second 
class;  five  dollars,  if  the  applicant  maintains  a  place  of  business 
or  customarily  solicits  business  in  a  city  of  the  third  class  and 
two  dollars,  if  the  applicant  does  not  maintain  a  place  of  business 
or  customarily  solicit  business  in  a  city.  The  fee  to  be  paid 
annually  by  a  nonresident  individual  applicant  who  does  not  main- 
tain a  place  of  business  in  the  state  of  Xew  York;  shall  be  ten 
dollars,  provided  that  if  such  applicant  does  not  solicit  business 
or  place  insurance  covering  property  or  risks  situated  in  a  city 
of  the  first  or  second  class,  the  fee  to  be  paid  shall  be  five  dollars. 

Every  broker's  certificate  of  authority  shall  expire  on  the  thirty- 
first  day  of  December  of  the  calendar  year  in  which  the  same  shall 
have  been  issued,  but  if  an  application  for  the  renewal  of  any 
such  certificate  shall  have  been  filed  with  the  superintendent  of 
insurance  before  January  first  of  any  year  the  certificate  of  au- 
thority sought  to  be  renewed  shall  continue  in  full  force  and 
effect  until  the  issuance  by  the  superintendent  of  insurance  of 
the  new  certificate  applied  for  or  until  ^ve  days  after  the  super- 
intendent of  insurance  shall  have  refused  to  issue  such  new  cer- 
tificate and  shall  have  served  notice  of  such  refusal  on  the  appli- 
cant therefor.  Service  of  such  notice  may  be  made  either  per- 
sonally or  by  mail,  and,  if  by  mail,  shall  be  deemed  complete  if 
such  notice  is  deposited  in  the  post  office  postage  prepaid,  directed 
to  the  applicant  at  the  place  of  business  specified  in  the 
application. 

Before  any  broker's  certificate  of  authority  shall  be  issued  by 
the  superintendent  of  insurance  there  must  be  filed  in  his  office  a 
written  application  therefor.  Such  application  shall  be  in  the 
form  or  forms  and  supplements  thereof  prescribed  by  the  super- 
intendent of  insurance  and  must  set  forth   (1)   the  name   and 


274  The  Insurance  Law.      '  §  143. 

address  of  the  applicant,  and  if  the  applicant  be  a  partnership 
or  association,  the  name  and  address  of  each  member  thereof,  and 
if  the  applicant  be  a  corporation,  the  name  and  address  of  each 
of  its  officers  and  directors;  (2)  whether  any  certificate  of  au- 
thority as  agent  or  broker  has  been  issued  theretofore  by  the 
superintendent  of  insurance  to  the  applicant,  and,  if  the  applicant 
be  an  individual,  whether  any  such  certificate  has  been  issued 
theretofore  to  any  partnership  or  association  of  which  he  was 
or  is  a  member  or  to  any  corporation  of  which  he  was  or  is  an 
officer  or  director,  and,  if  the  applicant  be  a  partnership  or  asso- 
ciation whether  any  such  certificate  has  been  issued  theretofore 
to  any  member  thereof,  and,  if  the  applicant  be  a  corporation, 
whether  any  such  certificate  has  been  issued  theretofore  to  any 
officer  or  director  of  such  corporation;  (3)  the  business  in  which 
the  applicant  has  been  engaged  for  the  year  next  preceding  the 
date  of  the  application,  and,  if  employed  by  another,  the  name 
or  names  and  address  or  addresses  of  such  employer  or  employers ; 
(4)  such  information  as  the  superintendent  of  insurance  may 
require  of  applicants  to  enable  him  to  determine  their  trustworthi- 
ness and  competency  to  transact  the  insurance  brokerage  business 
in  such  manner  as  to  safeguard  the  interests  of  the  assured. 

An  application  for  a  broker's  certificate  of  authority  must  be 
signed  and  verified  by  the  applicant  and,  if  made  by  a  partner- 
ship or  association,  by  each  member  thereof  and  if  made  by  a 
corporation  by  each  officer  and  director  thereof  to  be  authorized 
thereby  to  act-  as  a  broker. 

A  corporation,  association  or  partnership  to  whom  a  certificate 
of  authority  shall  have  been  issued  by  the  superintendent  of  in- 
surance under  this  section  may  at  any  time  make  an  application 
to  the  superintendent  of  insurance  for  the  issuance  of  a  supple- 
mental certificate  of  authority  authorizing  additional  officers  or 
directors  of  the  corporation  or  members  of  the  partnership  or 
association  to  act  as  brokers,  and  the  superintendent  of  insurance 
may  thereupon  issue  to  such  corporation,  association  or  partner- 
ship a  supplemental  certificate  accordingly  upon  the  payment  of 
an  additional  fee  for  each  member  or  officer  or  director  thereby 
authorized  to  act  as  a  broker. 

A  certificate  issued  under  this  section  shall  be  revoked  by  the 
superintendent,  if  after  due  investigation  and  a  hearing  either 
before  him  or  before  any  salaried  employee  of  the  insurance  de- 
partment designated  by  him  whose  report  he  may  adopt,  he  de- 
termines that  the  holder  of  such  certificate     (1)    has    violated 


§  143.  FiiiE  Insurance  Coepoeation.  275 

any  provision  of  the  chapter  by  any  act  or  thing  done  in  respect 
to  insurance  for  which  such  certificate  is  required;  or  (2) 
has  made  a  material  misstatement  in  the  application  for  such  cer- 
tificate; or  (3)  has  been  guilty  of  fraudulent  practices;  or 
(4)  has  demonstrated  his  incompetency  or  untrustworthiness 
to  transact  the  insurance  brokerage  business  for  which  such  cer- 
tificate of  authority  shall  have  been  granted  by  reason  of  any- 
thing done  or  omitted  in  or  about  such  business  under  the  au- 
thority of  such  certificate. 

ISio  individual,  partnership,  association  or  corporation  whose 
certificate  of  authority  is  so  revoked  nor  any  partnership  or  asso- 
ciation of  which  such  individual  is  a  member,  nor  any  corpora- 
tion of  which  he  is  an  officer  or  director  shall  be  entitled  to  any 
certificate  of  authority  under  this  section  for  a  period  of  one  year 
after  such  revocation,  or,  if  such  revocation  be  reviewed  by 
certiorari  proceedings,  for  one  year  after  the  final  determination 
thereof  affirming  the  action  of  the  superintendent  in  revoking 
such  certificate.  If  any  such  certificate  held  by  a  partnership, 
association  or  corporation  be  so  revoked,  no  member  of  the  part- 
nership or  association  or  officer  or  director  of  the  corporation  shall 
be  entitled  to  such  a  certificate  for  the  same  period  of  time,  if  the 
superintendent  of  insurance  determines  and  finds  that  such  mem- 
ber or  officer  or  director  was  personally  at  fault  in  the  matter  on 
account  of  which  the  certificate  was  revoked.  The  holder  of  any 
such  certificate  or  any  person  aggrieved  may  file  with  the  superin- 
tendent of  insurance  a  verified  complaint  setting  forth  facts  from 
which  it  shall  appear  that  any  such  certificate  ought  to  be  revoked. 
The  superintendent  must  thereupon,  after  investigation  and  a 
hearing  as  herein  provided,  determine  whether  such  certificate 
shall  be  revoked. 

If  an  application  for  a  certificate  of  authority  under  this  sec- 
tion be  rejected  or  such  a  certificate  be  revoked  by  the  superin- 
tendent of  insurance  notice  thereof  shall  forthwith  be  served  on 
the  applicant  or  on  the  holder  of  such  certificate  either  personally 
or  by  mail,  and,  if  by  mail,  such  service  shall  be  complete  if 
such  notice  be  deposited  in  the  post-office  postage  prepaid,  directed 
to  the  applicant  or  the  holder  of  such  certificate,  as  the  case  may 
be,  at  the  place  of  business  specified  in  the  application  or 
certificate. 

The  action  of  the  superintendent  of  insurance  in  granting  or 
refusing  to  grant  or  to  renew  a  certificate  of  authority  or  in 
revoking  or  refusing  to  revoke  such  a  certificate  shall  be  subject 


276  The  Insueance  Law.  §  144. 

to  review  by  writ  of  certiorari,  at  the  instance  of  tJie  applicant 
for  such  certificate,  the  holder  of  a  certificate  so  revoked  or  the 
holder  of  any  such  certificate  or  the  person  aggrieved.  If  the 
superintendent  of  insurance  shall  revoke  or  shall  refuse  to  renew 
the  certificate  of  authority  of  any  broker  issued  under  this  sec- 
tion and  such  broker  shall  apply  for  a  writ  of  certiorari  to  review 
such  action,  the  certificate  of  authority  of  such  broker  shall  be 
deemed  to  be  in  full  force  and  effect  for  all  purposes,  including 
the  right  to  renewal,  until  the  final  determination  of  such  cer- 
tiorari proceedings  and  all  appeals  therefrom,  provided  the  fee 
for  such  certificate  be  paid. 

This  section  shall  not  apply  to  any  contract  of  life  insurance 
nor  to  any  contract  of  insurance  upon  or  in  connection  with 
marine  or  transportation  risks  or  hazards  other  than  contracts 
for  automobile  insurance,  nor  to  contracts  of  insurance  upon 
property  located  without  this  state,  nor  to  contracts  made  by  per- 
sons, partnerships,  associations  or  corporations  authorized  to  do 
business  under  articles  five,  six,  seven  and  nine  of  this  chapter. 

Any  person,  partnership,  association  or  corporation  violating 
any  of  the  provisions  of  this  section  shall  in  addition  to  any  other 
penalty  in  this  chapter  provided,  forfeit  to  the  people  of  the  state 
five  hundred  dollars. 

Source. — Former  §  139,  as  added  by  L.  1905,  chap.  566,  repealed  by  L.  1910, 
chap.  638. 

Amended  by  L.  1913,  chap.  12,  and  L.  1915,  chap.  56.  In  effect  January  1, 
1916. 

Note. — The  purpose  of  the  addition  of  this  section  by  diapter  12  of  1913  was 
to  compel  all  applicants,  for  certificates  of  authority  to  do  business  as  in- 
surance brokers  to  meet  the  test  of  trustworthiness  and  competency  proposed 
by  the  insurance  department  as  a  condition  to  receiving  their  license;  this 
section   takes   the  place  of  one,  declared  unconstitutional. — Ed. 

A  corporation  seeking  a  certificate  of  authority  to  do  business  as  an  insur- 
ance broker  must  pay  a  fee  of  ten  dollars  for  each  of  the  officers  or  directors 
who  are  to  be  authorized  to  act  in  behalf  of  the  corporation  as  brokers, 
regardless  of  the  fact  that  a  partnership  composed  of  the  same  individuals 
as  are  officers  of  the  corporation  has  previously  paid  a  fee  for  authority  to 
act  in  the  capacity  of  insurance  broker.  Attorney-General  Rep.,  February  1, 
1915. 

§  144.  Fees  not  to  be  included  in  consideration  for  fire 
insurance. 

It  shall  not  be  lawful     hereafter  for  any  fire  insurance  com- 
pany, or  for  any  officer,  manager,  agent  or  other  representative  of 
any  such  company,  to  include  in  the  sum  charged  or  designated  in 


§§  145-148.       FiKE  Insukance  Corporation.  277 

any  policy,  as  the  consideration  for  insurance,  any  fee,  compensa- 
tion, charge  or  perquisite  whatsoever. 

Source.— L.  1892,  chap.  641,  §  1. 

A  person  who  agrees  to  procure  insurance  for  another,  but  who  is  not  con- 
nected with  the  company  issuing  the  policy,  does  not  come  within  the  pro- 
visions of  this  section.    Tanenbaum  v.  Rosenthal,  44  App.  Div.,  431. 

Brokers  for  the  insured  are  not  subject  to  the  prohibition  of  section  1. 
Romberg  v.  Kouther,  27  Misc.,  227. 

§  145.    Report  of  consideration  to  company. 

Every  agent  or  other  representative  of  any  fire  insurance  con- 
pany,  issuing  a  policy  on  its  behalf,  on  property  in  this  state,  shaJ 
report  to  the  company  the  exact  consideration  charged  and  written 
in  the  policy,  as  a  premium  for  the  risk  assumed. 

Source.—  L.  1892,  chap.  641,  §  2. 

§  146.    Fees  and  charges  to  be  indorsed  on  policy. 

In  all  cases  \Ahere  a  policy  fee,  survey  fee,  or  other  fee  or 
charge  in  addition  to  the  consideration  las  premium  written 
in  the  policy,  is  made  against,  or  collected  from  the  assured  by 
the  agent,  or  other  representative  of  any  fire  insurance  company, 
such  agent  or  representative  shall  indorse  the  amount  of  stich  fee 
or  charge,  and  the  nature  and  particulars  thereof,  upon  the  policy, 
and  shall  report  the  amount  and  particulars  of  any  such  fee  or 
charge  to  the  company  on  behalf  of  which  such  policy  is  issued. 
Source.— L.  1892,  chap.  641,  §  3. 

§  147.    Penalty  for  violation  by  company. 

Any  fire  insurance  company  violating  the  provisions  or  failing  to 
comply  with  the  requirements  of  section  one  hundred  and  forty- 
four,  shall  upon  complaint  made  by  the  superintendent  of  the 
insurance  department  or  any  citizen  of  this  state,  be  liable  to  a 
fine  of  not  less  than  twenty-five  dollars  nor  more  than  one  hun- 
dred dollars  for  the  first  offense,  and  of  not  less  than  one  hundred 
dollars  nor  more  than  two  hundred  and  fifty  dollars  for  each  sub- 
sequent offense. 

Source.—  L.  1892,  chap.  641,  §  4. 

§  148.    Penalties  for  violation  by  officers  and  agents. 

Any  officer,  manager,  agent  or  other  representative  or  either 
of  them   of   any   fire   insurance  company   violating   any  of  the 


278  The  Insurance  Law.  §  149. 

provisions  or  failing  to  comply  with  any  of  the  requirements  of 
the  last  four  sections  is  guilty  of  a  misdemeanor,  and  upon  com- 
plaint made  by  the  superintendent  of  the  insurance  department, 
or  any  citizen  of  this  state,  upon  conviction  thereof,  shall  be  liable 
to  a  fine  of  not  more  than  fifty  dollars  for  the  first  offense,  and 
not  more  than  one  hundred  dollars  for  each  subsequent  offense  oi 
to  imprisonment  for  not  exceeding  three  months,  or  both. 
Source. —  L.  1892,  chap.  641,  §  5,  as  amended  by  L.  1896,  chap.  841,  §  1. 

§  149.  Authorization  of  foreign  mutual  fire  insurance 
corporations. 

Every  mutual  fire  insurance  company  or  association  incor- 
porated under  the  laws  of  any  other  state  of  the  United  States 
may  be  permitted  to  do  business  in  this  state  by  the  superintendent 
of  insurance  on  filing  with  him  the  following: 

a.  A  certified  copy  of  its  articles  of  incorporation  or  association 
and  of  its  by-laws. 

b.  A  consent,  duly  executed,  appointing  the  superintendent  of 
insurance  to  be  the  true  and  lawful  attorney  for  such  company  or 
association  in  and  for  this  state,  upon  whom  all  legal  process  in 
any  action  or  proceeding  against  the  company  or  association  may 
be  served  with  the  same  effect  as  if  it  was  a  domestic  company 
or  association.  Service  upon  such  attorney  shall  thereafter  be 
deemed  service  upon  the  company  or  association. 

c.  An  agreement  that  it  will  pay  the  taxes  provided  for  in  sec- 
tion one  hundred  and  forty-nine-a  of  this  chapter,  and  that  it  will 
furnish  any  further  information  as  to  its  financial  condition,  as 
the  superintendent  of  insurance  shall  require. 

d.  And  each  such  company  shall  pay  to  the  superintendent  of  in- 
surance the  fees  required  by  section  six  of  this  chapter. 

Provided,  that  no  such  certificate  of  authority  shall  be  granted 
unless  such  company  shall  (a)  have  at  least  five  million  dollars  of 
insurance  in  force  in  not  less  than  two  hundred  separate  risks; 
and  (b)  shall  have  transacted  a  fire  insurance  business  in  its  home 
state  for  at  least  ten  years;  and  (c)  shall  have  had  insurance  in 
force  in  at  least  the  amount  of  ^ye  million  dollars -in  each  of  the 
HYe  years  immediately  preceding  its  application  for  admission  to 


§  149.  Fire  Insueance  Cokpokation.  279 

do  business  in  this  state;  and  (d)  shall  have  and  maintain  a  reserve 
fund  equal  to  the  total  unearned  premiums  on  the  policies  in 
force  calculated  on  the  gross  sum  without  any  deduction  on  any 
account  charged  to  policyholders  on  each  respective  risk  from  the 
date  of  the  issue  of  the  policy;  and  (e)  in  addition  to  maintaining 
such  unearned  premium  reserve  fund,  shall  either  keep  on  deposit 
for  the  benefit  of  all  its  policyholders  with  the  superintendent 
of  insurance  of  this  state  or  with  the  auditor,  comptroller  or 
general  fiscal  ofiicer  of  the  state  under  the  laws  of  which  it  is 
incorporated,  the  sum  of  two  hundred  thousand  dollars,  or  shall 
have  a  surplus  or  other  net  assets  of  at  least  fifty  thousand  dollars 
and  in  addition  contingent  assets  of  at  least  fifty  thousand  dollars 
in  the  form  of  the  obligations  of  policyholders  to  pay  such  amount 
when  lawfully  assessed  therefor;  and  (f)  shall  have  net  and  con- 
tingent assets  which  together  with  the  unearned  premium  fund 
shall  equal  one  per  centum  of  the  total  insurance  in  force;  and 
(g)  in  the  event  that  such  company  does  not  keep  on  deposit  the 
sum  of  two  hundred  thousand  dollars  as  in  "  e  "  aforesaid  it  shall 
provide  in  all  policies  issued  by  it  that  the  policyholder  is  liable, 
in  addition  to  the  original  premium  paid,  to  assessment  in  an 
amount  at  least  equal  to  one  year's  premiums;  provided,  further, 
that  no  such  company  shall  be  exposed  to  loss  to  an  amount 
exceeding  ten  per  centum  of  its  actual  net  and  contingent  assets 
upon  property  not  protected  by  automatic  sprinklers  situated 
within  the  boundaries  of  one  city  block  or  on  one  group  of 
buildings  composed  of  attached  or  adjacent  buildings  which  have 
less  than  sixty  feet  of  clear  space  at  all  points  between  such 
buildings  and  other  buildings;  provided,  further,  that  the  certi- 
ficate of  authority  granted  by  the  superintendent  of  insurance 
pursuant  to  the  provisions  of  this  act  to  such  insurance  corporation 
to  do  business  in  this  state  shall  not  remain  in  force  for  a  longer 
period  than  one  year  and  that  whenever  the  condition  of  any 
such  corporation  to  which  a  certificate  of  authority  has  been 
granted  is  such  that  it  cannot  meet  all  the  requirements  of  this 
section  the  superintendent  of  insurance  shall  forthwith  revoke 
such  certificate.  The  deposit  or  the  surplus  of  any  such  company 
so  authorized  to  do  business  in  this  state,  to  the  extent  of  the 
minimum  amount  thereof  required  by  this  section   shall  be  in- 


280  The  Insukance  Law.  §   14:9a. 

vested  and  kept  invested  in  securities  of  the  kind  and  character 
in  which  domestic  or  foreign  companies  are  required  to  invest  as 
minimum  capital  investments  by  section  sixteen  of  this  chapter, 
except  that  bonds  and  mortgages  on  real  estate  shall  not  be 
accepted  as  deposit  securities  to  be  held  by  the  superintendent  of 
insurance  of  this  state.  Any  such  company  so  admitted  to  do 
business  may  in  addition  to  insuring  property  against  loss  or 
damage  by  fire  also  insure  any  goods  or  premises  against  loss  or 
damage  by  water  caused  by  the  breakage  cr  le^akage  of  sprinklers, 
pumps,  water  pipes,  or  plumbing  and  its  fixtures  and  against  acci- 
dental injury  from  other  cause  than  fire  or  lightning  to  sucti 
sprinklers,  pumps,  water  pipes,  plumbing  and  fixtures. 

Source.— A^ded  by  L.  1909,  ohap.  286. 

Amended  by  L.  1911,  chaps.  161  and  765. 

§  149a.    Premium  or  assessment  tax. 

Every  mutual  fire  insurance  company  or  association  authorized 
to  do  business  in  this  state  pursuant  to  section  one  hundred  and 
forty-nine  of  this  chapter  shall,  in  lieu  of  all  other  taxes  on 
premiums,  annually,  on  or  before  the  first  day  of  February  of 
each  year,  pay  a  tax  of  one  per  centum  on  all  gross  premiums  or 
assessments  collected  or  received  by  it  or  them  for  such  insurance 
upon  property  situate  within  this  state  during  the  preceding  year 
ending  the  thirty-first  day  of  December  to  the  superintendent  of 
insurance,  except  that  any  company  so  authorized  to  do  business 
in  this  state  which  is  incorporated  under  the  laws  of  any  other 
state,  which  taxes  such  company  therein  upon  the  gross  premiums 
or  assessments  collected  by  it  less  that  portion  of  said  gross 
premiums  or  assessments  returned  on  policies  expired  or  can- 
celed, shall  not  be  required  to  pay  under  this  section  any 
difi^erent  or  higher  rate,  provided,  however,  that  in  no  event 
shall  such  tax  be  less  than  three  per  centum  of  the  net  cost  of 
insurance  to  the  policyholder.  On  or  before  the  first  day 
of  February  of  each  year  every  such  company  or  association 
shall  file  with  said  superintendent  a  detailed  statement  showing 
the  gross  amount  of  premiums  and  assessments  collected  during 
the  preceding  year,  for  insurance  upon  property  located  in  this 
state  and  specifying  the  amounts  of  premiums  and  assessments  so 


§§  1-iDb,   149c.       FiKE  Insuilvnce  Cokpoeation.  281 

collected  by  city,  town,  village  or  lire  district  in  which  the  prop- 
erty covered  by  such  insurance  is  located.  In  case  any  such  com- 
pany or  association  shall  neglect  or  refuse  to  make  and  file  such 
report,  or  pay  the  tax  imposed  by  this  section,  its  certificate  of 
authority  to  do  business  in  this  state  shall  be  revoked  by  the  super- 
intendent of  insurance  and  it  shall  forfeit  the  sum  of  one  hun- 
dred dollars  for  each  day  after  the  first  day  of  February  of  eacli 
year  that  it  shall  omit  to  make  and  file  such  report,  or  shall  neglect 
to  pay  the  tax  imposed  by  this  section,  which  sum  shall  be  col- 
lected in  an  action  in  the  name  of  the  people  of  the  state  of  ISTew 
York  to  be  prosecuted  by  the  superintendent  of  insurance  and  col- 
lected by  him.  After  the  neglect  or  refusal  of  such  company  or 
association  to  make  and  file  such  report,  or  pay  such  tax,  such 
company  or  association  or  its  agents  shall  not  effect  any  insurance 
on  any  property  in  this  state. 

Source.— Added  by  L.  1909,  ohap.  286. 

Amended  by  L.  1911,  chap.  161. 

§  149b.    Agents. 

No  person  shall  act  within  this  state  for  any  mutual  fire  insur- 
ance company  or  association,  organized  under  the  laws  of  any 
other  state  of  the  United  States,  in  placing  risks,  adjusting  losses, 
fixing  rates,  or  inspecting  risks,  unless  such  company  or  association 
is  authorized  to  do  business  within  this  state.  Any  person  vio- 
lating the  provisions  of  this  section  shall  be  guilty  of  a 
misdemeanor. 

Source.— Added  by  L.  1909,  chap.  286. 

§  149c.    Distribution  of  annual  tax. 

All  moneys  received  by  the  superintendent  of  insurance  under 
the  provisions  of  section  one  hundred  and  forty-nine-a  of  this 
chapter  shall  be  distributed  by  him  on  April  first  of  each  year 
after  deducting  the  expenses  of  the  collection  and  distribution 
thereof,  as  follows:  Ten  per  centum  thereof  to  the  Firemen's 
Association  of  the  State  of  IsTew  York  for  the  support  and  main- 
tenance of  the  Firemen's  Home  at  Hudson,  New  York,  and  the 
balance  to  the  various  associations,  cities,  villages  and  *fire  districts 


282  The  Insurance  Law.  §  149c. 

in  the  same  maimer  and  to  the  same  extent  as  the  tax  imposed 
by  section  one  hundred  and  thirty-three  of  this  chapter  is  now 
received  by  them,  except  that  in  the  cities  of  New  York  and 
Buifalo,  he  shall  pay  the  same  to  the  officers  and  associations  now 
receiving  the  tax  imposed  on  foreign  fire  insurance  companies 
under  the  provisions  of  the  charters  of  said  cities.  The  superin- 
tendent of  insurance  shall  appoint,  for  a  term  not  exceeding  his 
own  term  of  office,  a  suitable  and  competent  person  to  collect  and 
distribute  the  tax  imposed  by  section  one  hundred  and  forty-nine-a 
of  this  chapter.  The  person  so  appointed  shall  receive  such  com- 
pensation for  his  services  and  disbursements  as  the  superintendent 
of  insurance  shall  fix,  but  the  same  shall  be  payable  only  from 
the  moneys  which  the  said  superintendent  shall  receive  under  the 
provisions  of  said  last  mentioned  section. 
Source.— Added  by  L.  1909,  chap.  286. 


150.  Marine  Insurance  Corporations.  283 


AETICLE  IV. 

Marine  Insurance  Corporations. 

Section  150.  Incorporation. 

151.  Subscriptions  to  stock. 

152.  Restrictions  as  to  capital  stock  and  premium  notes. 

153.  Increase  of  capital  by  mutual  corporations. 

154.  Cash  capital  of  mutual  corporations. 

155.  Rights  and  liabilities  of  holders  of  cash  capital. 

156.  Certificates  convertible  into  stock. 

157.  Amendment  of  charter. 

158.  Extension  of  charter. 

159.  Change  in  plan  of  insurance. 

160.  Charges  for  insurance  upon  canals  of  the  state. 

161.  Agencies  beyond  the  United  States. 

162.  Lloyds  or  individual  underwriters. 

Section  150.    Incorporation. 

Thirteen  or  more  persons  may  become  a  corporation  for  the  pur- 
pose of  making  insurance  upon  vessels,  freights,  goods,  wares, 
merchandise,  specie,  bullion,  jewels,  profits,  commissions,  bank- 
notes, bills  of  exchange,  and  other  evidences  of  debt,  bottomry  and 
respondentia  interests,  and  every  insurance  appertaining  to  or 
connected  with  marine  risks  and  risks  of  transportation  and 
navigation,  including  the  risks  of  lake,  river,  canal  and  inland 
transportation  and  navigation,  insurances  upon  automobiles, 
whether  stationary  or  being  operated  under  their  own  power, 
which  shall  include  all  or  any  of  the  hazards  of  fire,  explosion, 
transportation,  collision,  loss  by  legal  liability  for  damage  to 
property  resulting  from  the  maintenance  and  use  of  automobiles, 
and  loss  by  burglary  or  theft  or  both,  but  shall  not  include 
insurances  against  loss  by  reason  of  bodily  injury  to  the  person, 
and  of  reinsuring  any  risks  taken  by  it,  by  making, 
acknowledging  and  filing  in  the  ofiice  of  the  superintendent  of 
insurance  a  declaration  signed  by  all  of  tiiem,  stating  their  inten- 
tion to  form  a  corporation  for  one  or  more  or  all  of  such  pur- 
poses, with  a  copy  of  the  charter  proposed  to  be  adopted  by  it, 
which  charter  shall  set  forth  the  name  of  the  corporation,  the 
place  where  its  principal  office  shall  be  located,  the  mode  in  which 
its  corporate  powers  are  to  be  exercised,  and  of  electing  director3, 


284  The  Insft^axce  Law.  ^  150. 

each  of  whom,  if  a  stock  corporation,  shall  be  the  owner  in  his  own 
right  of  five  hundred  dollars  par  value  of  its  stock  and  a  majority 
of  whom  shall  be  citizens  of  this  state,  the  mode  of  filling  vacan- 
cies in  the  office  of  director,  the  period  for  the  commencement  and 
termination  of  its  fiscal  year,  the  amount  of  its  capital  or  capital 
stock  and  the  number  of  shares  into  which  it  shall  be  divided,  if  a 
stock  corporation.  Thereupon  such  persons  and  all  others  who 
shall  become  stockholders  or  members  thereof,  shall  be  a  corpora- 
tion by  the  name  expressed  in  the  charter. 

]N"o  such  corporation  shall  commence  the  transaction  of  the  busi- 
ness of  insurance  until  after  publication  of  a  notice  of  its  inten- 
tion to  do  so,  once  a  week  for  at  least  six  weeks,  in  a  public  news- 
paper in  the  county  in  which  it  is  proposed  to  be  located,  nor  if  a 
stock  corporation,  until  its  capital  stock  shall  all  have  been  paid 
in  in  cash.  Every  such  corporation  shall  continue  in  existence  for 
thirty  years,  or  for  such  less  time  as  may  be  specified  in  its  charter. 
N'o  such  corporation  shall  directly  or  indirectly  deal  or  trade  in 
buying  or  selling  goods,  wares  or  merchandise,  or  other  commodi- 
ties, except  such  as  may  have  been  insured  by  it,  and  such  as  may 
be  sold  under  judicial  process  or  otherwise  in  which  or  in  the 
profits  of  the  sale  of  which  it  may  be  interested  by  reason  of  having 
previously  become  insurers  of  the  same  or  of  some  share  or  portion 
thereof. 

Source. — Former  §  150,  as  amended  by  L.  1907,  chap.  206;  originally  revised 
from  L.  1849,  chap.  308,  §§  1-3,  10,  as  amended  by  L.  1867,  c^ap.  574  and  §§  15, 
18;  L.  1867,  chap.  442,  §  1. 

Amended  by  L.  1909,  chap.  240;  L.  1910,  chap.  168,  and  L.  1911,  cJiap.  126. 

See  §  6,  ante.    Fees  to  superintendent  for  filing  declaration. 

See  §  9,  ante.    Certificate  of  authorization  of  superintendent. 

See  §  10,  ante.     Certificate  of  attorney -general;  corporate  names. 

See  §  12,  ante.    Minimum  capital  stock  of  marine  stock  company. 

See  §  13,  ante.    Deposit  of  securities  with  superintendent. 

See  chap.  738  of  1900.    Reincorporation  of  foreign  moneyed  corporations. 

The  subscription  agreement  must,  under  the  statute,  amount  to  something 
more  than  an  underwriting  agreement  to  furnish  so  much  capital  to,  or  to 
acquire  so  much  business  for,  the  company.  Attorney-'TJoneral  Rep.,  April  6, 
1916. 

A  corporation  under  §  150  relating  to  marine  insurance  corporations  is  not 
authorized  to  insure  a  pier  in  the  >Torth  river,  or  structures  thereon.  Attor- 
ney-General Rep.,  May  6,  1911. 


§§   151,   152.      Mat^tne  Tn^surance   roin'ORATioNS.  285 

QUORUM. —  A  quorum  of  directors  must  be  a  majority  of  all  the  directors, 
unless  otherwise  lirovided  in  charter  or  special  law.  By-laws  cannot  change 
this  rule.  In  re  New  Amsterdam  Cas.  Co.,  Attorney-General  Rep.,  1900, 
page  253. 

§  161.    Subscription  to  stock. 

After  the  publication  of  such  notice  and  the  filing  of  such 
declaration  and  charter,  the  corporation  may  open  books  for  sub- 
scription to  its  capital  stock  and  keep  the  same  open  until  the 
full  amount  specified  in  the  charter  is  subscribed ;  or,  if  its  busi- 
ness is  to  be  conducted  on  the  plan  of  mutual  insurance,  it  may 
open  books  to  receive  propositions  and  enter  into  agreements  for 
insurance  in  the  manner  and  to  the  extent  hereinafter  specified 

Source. — Former  §  151;  originally  revised  from  L.  1849,  chap.  308,  §  4. 

See  §  53,  Stock  Corporation  T^aw,  chap.  61  of  1909.  Subscription  to  capital 
stock. 

See  §  660,  Penal  Law.     Frauds  in  organization  of  corporations. 
See  §  662  et  seq..  Penal  Law.     Fraudulent  issue  of  stock. 

§  152.    Restrictions  as  to  capital  stocl<  and  premium  notes. 

ISiO  such  corporation  shall  be  organized  in  the  county  of  New 
York,  or  in  the  county  of  Kings,  with  a  smaller  capital  than 
fifty  thousand  dollars,  nor  shall  any  such  corporation  formed  for 
the  ]nirpose  of  doing  business  on  the  plan  of  mutual  insurance,  com- 
mence business  if  located  in  the  county  of  New  York,  or  county 
of  Kings,  until  agreements  have  been  entered  into  for  insurance 
with  at  least  one  hundred  applicants,  the  premiums  on  which  shall 
amount  to  at  least  three  hundred  thousand  dollars,  and  notes  have 
been  received  in  advance  for  the  premiums  on  such  risks,  payable 
at  the  end  of  or  within  twelve  months  from  the  date  thereof,  wliich 
notes  shall  be  considered  as  a  part  of  its  capital,  and  shall  be 
known  as  capital  stock  notes  and  shall  be  valid,  negotiable  and 
collectible  for  the  purpose  of  paying  any  losses  which  may  occur 
or  otherwise. 

No  such  mutual  insurance  corporation  shall  in  any  other  county 
of  the  state  commence  business  until  such  agreements  have  bebu 
entered  into,  the  premiums  on  which  shall  amount  to  one  huridre(] 
thousand  dollars  and  notes  receiv^ed  therefor,  which  notes  shj^ll  be 
payable  and  shall  be  liable  for  and  used  as  above  specific^. 


286  The  Insurance  Law.  §§  153,  154. 


Any  such  mutual  insurance  corporation  heretofore  or  hereafter 
organized  may  issue  policies  providing  that  the  assured  in  such 
policies  shall  not  participate  in  the  profits  of  the  corporation,  and 
that  in  lieu  of  scrip  the  corporation  may  stipulate  for  and  take  a 
net  premium,  or  may  make  a  cash  deduction  from  the  premiums 
paid  on  such  non-participating  policies,  though  such  mode  of  doing 
business  may  not  be  declared  in  its  charter. 

Source. — Former  §  152;  originally  revised  from  L.  1849,  chap.  308,  §  5  and 
§  10,  as  amended  by  L.  1867,  chap.  574. 

See  §  12,  ante.    Minimum  capital  stock  of  marine  insurance  corporatioi.8. 

The  subscription  agreement  must,  under  the  statute,  amount  to  something 
more  than  an  underwriting  agreement  to  fumisih  so  much  capital  to,  or  to 
acquire  so  much  business  for,  the  company;  it  must  be  upon  specific  automo- 
biles.   Attorney-General  Rep.,  April  6,  1016. 

§  153.    Increase  of  capital  by  mutual  corporations. 

Any  domestic  mutual  marine  insurance  corporation  liaving  its 
principal  office  in  the  city  of  New  York  may  increase  its  capital 
or  fund  on  the  amount  of  accumulated  net  profits,  which  it  is 
permitted  to  retain  for  the  benefit  and  security  of  its  policyholders, 
to  any  amount  which  shall  be  deemed  expedient  by  its  board 
of  directors,  but  if  there  is  in  the  charter  of  such  corporation  any 
limitation  of  its  capital  or  fund,  or  the  amount  of  net  profits  which 
it  has  the  power  to  accumulate  and  retain,  such  increase  shall  not 
be  made  unless  a  written  consent  thereto  under  the  seal  of  the 
corporation,  by  a  resolution  of  the  board  of  directors,  certified  by 
the  secretary,  shall  first  be  filed  in  the  office  of  the  superinteudoTst 
of  insurance,  and  the  privilege  of  retaining  profits  over  one  million 
dollars  shall  not  be  exercised  by  any  corporation  availing  itself  of 
the  provisions  of  this  section,  until  a  sufficient  sum  shall  be  applied 
by  such  corporation  according  to  the  provisions  of  its  charter, 
towards  the  redemption  of  all  certificates  or  premiums  hen^tofore 
issued  and  now  outstanding. 

Source.— Former  §  153;  originally  revised  from  L.  1849,  chap.  308,  §  22,  as 
added  by  L.  1855,  chap.  292. 

§  154.    Cash  capital  of  mutual  corporations. 

Any  domestic  mutual  marine  insurance  corporation  may  create 
or  unite  with  its  existing  corporate  funds,  if  it  has  any  such  funds, 
a  cash  capital  of  not  less  than  three  hundred  thousand  dollars,  to 
be  divided  into  shares  of  one  hundred  dollars  each,  to  be  issued  to 


§  155.  Marine  Insuiiance  Cokporations.  287 

such  persons  as  shall  subscribe  and  pay  for  the  same,  which  shall 
be  transferable  only  on  the  books  of  the  corporation,  subject  to 
such  regulations  as  the  directors  shall  from  time  to  time  prescribe. 

The  profits  of  the  business  of  such  corporation,  after  setting 
apart  a  sufficient  sum  to  pay  six  per  cent  per  annum  upon  the 
cash  capital  and  the  interest  accruing  upon  any  outstanding  scrip 
or  certificates,  shall  be  divided  between  the  stockholders  and  others 
entitled  by  its  charter  or  articles  of  association  to  participate  in 
its  profits  in  the  following  manner,  viz. :  One-third  thereof,  or 
such  other  proportion  not  exceeding  that  rate  as  may  be  deter- 
mined and  agreed  upon  at  the  time  when  the  subscriptions  to 
the  cash  capital  thereof  are  made,  to  the  stockholders  in  cash,  and 
the  remainder  thereof  to  the  persons  entitled  by  its  charter  or 
articles  of  association  to  participate  in  its  profits,  to  whom  scrip 
certificates  therefor  shall  be  issued  as  provided  in  such  charter  or 
articles.  The  corporation  may  exclude  from  the  computation  of 
premiums  entitled  to  participate  in  such  profits,  premiums  or 
risks  on  which  loss  shall  have  happened. 

The  fund  represented  by  the  scrip  shall  constitute  a  surplus  or 
reserve  for  the  security  and  payment  of  losses,  and  be  liable  for 
any  excess  of  losses  and  expenses  above  the  earned  premiums  of 
any  year.  Each  later  annual  issue  of  scrip  shall  be  first  reduced 
and  wholly  canceled  before  any  previous  annual  issue  is  at  all 
reduced,  and  all  issues  of  scrip  shall  be  liable  to  reduction  and 
cancellation  before  the  capital  stock  shall  be  encroached  upon. 

The  provisions  of  this  section  and  of  the  two  following  sections 
shall  not  be  considered  to  extend  the  original  charter  of  any  cor- 
poration created  by  a  special  act  of  the  legislature,  or  to  apply  to 
or  revive  any  charter  under  which  any  corporation  is  not  actually 
transacting  business. 

Source. — Former  §  154;  originally  revised  from  L.  1849,  chap.  308,  §  21,  as 
amended  by  L.  1857,  chap.  38;  L.  1857,  chap.  28,  §§  1,  2,  7. 

§  155.    Rights  and  liabilities  of  holders  of  cash  capital. 

The  holders  of  the  cash  capital  paid  in  shall  be  entitled  to  one 
vote  either  in  person  or  by  proxy  at  all  elections  of  the  corporation 
for  each  share  of  stock  held  by  them  respectively.  No  person 
shall  be  entitled  to  vote  at  any  election  by  reason  of  being  the 
holder  of  a  policy  issued  after  such  cash  capital  is  paid  in,  or  of 


288  The  Insurance  L.^w,  §  150. 

being  the  holder  of  any  scrip  or  certificate  of  profits  of  such  cor- 
poration issued  after  that  time,  unless  otherwise  provided  for  in 
the  articles  of  subscription  to  such  cash  capital.  Each  subscriber 
to  the  cash  capital  shall  be  individually  liable  to  the  extent  of  his 
subscription  for  the  debts  of  the  corporation  until  the  shares  of 
stxxjk  subscribed  for  by  him  shall  have  been  paid  in  cash  to  the 
corporation. 

Source. — ^Former  §  155;  originally  revised  from  L.  1849,  chap.  308,  §  19;  L. 
1857,  chap.  28,  §§  4,  6;  L.  1884,  chap.  95,  §  2. 

See  §  25  et  eeq.,  Stock  Corporation  Law,  chap.  564  of  1890.  Directors  and 
officers  and  their  election. 

See  §  56  et  seq.,  Stock  Corporation  Law,  chap.  61  of  1909.  Liability  of 
stockholders  and  the  limitation  of  their  liability. 

§  156.    Certificates  convertible  into  stock. 

Whenever  the  cash  stock  paid  in,  as  provided  in  section  one  hun- 
dred and  fifty-four,  shall  amount  to  three  hundred  thousand  dollars 
or  more,  the  directors  may,  by  a  vote  of  three-fourths  of  the  whole 
number,  convert  the  certificates  of  profits,  in  whole  or  in  part,  into 
cash  stock ;  commencing,  if  in  part,  with  the  certificates  of  the  year 
of  earliest  issue  outstanding,  and  so  on  in  succession,  upon  applica- 
tion therefor  being  made  to  the  corporation  by  the  holders  thereof, 
within  such  period  of  time  and  at  such  a  price  not  exceeding  its 
par  value,  and  under  such  conditions  and  regulations  as  the 
trustees  may  prescribe  for  that  purpose.  Whenever  the  cash  stock 
shall  amount  to  five  hundred  thousand  dollars  or  more,  the 
directors  may,  by  a  like  vote,  call  in  and  redeem  and  cancel  the 
outstanding  certificates  of  profits  and  make  the  corporation  wholly 
a  cash  stock  corporation,  dividing  all  its  profits  to  the  cash  stock- 
holders; and  the  directors  shall  have  power  to  make  all  necessary 
by-laws  and  regulations  to  conform  to  such  changes  in  the  business 
of  the  corporation. 

Such  corporation  shall  not  apply  any  of  its  funds  or  profits  to 
the  redemption  or  payment  of  any  certificate  of  profits,  if  by  such 
payment  the  aggregate  of  its  cash  capital  and  its  accumulated 
profits  together  shall  be  reduced  below  tlie  amount  which  shall  bo 
fixed  by  its  by-laws  or  articles  of  association,  and  such  aggregate 
amount  shall  not  be  fixed  below  the  sum  of  one  million  dollars,  in 
addition  to  the  amount  of  cash  stock  thereof. 

Source. — Former  §  156;  originally  revised  ffom  L.  1857,  chap.  28,  §§  3,  5. 


§§  157,  158.   Marine  Insurance  Corporations.       289 

§  157.    Amendment  of  charter. 

Any  domestic  marine  insurance  corporation  may  amend  its 
charter  so  as  to  enable  it  to  transact  all  such  business  as  can  be 
transacted  by  marine  insurance  corporations  under  the  laws  of  the 
state,  by  filing  in  the  office  of  tlie  superintendent  of  insurance  a 
copy  of  its  charter  as  amended,  with  the  written  consent  thereto 
of  three-fourths  in  amount  of  its  stockholders,  if  a  stock  corpora- 
tion, or,  if  a  mutual  corporation,  of  two-thirds  of  its  directors. 
Thereupon  such  proceedings  shall  be  had  as  are  required  by  law  to 
be  taken  upon  the  filing  of  an  original  declaration  and  charter,  and 
such  corporation  shall  not  transact  any  business  under  such  amended 
charter  until  it  shall  have  obtained  the  certificate  of  authority 
required  by  law  from  the  superintendent  of  insurance. 

Source.— Former  §  157;   originally  revised  from  L.  1880,  chap.  222,   §  1. 

See  §  37,  ante.  Corporations  heretofore  formed  brought  within  the  pro- 
visions of  the  Insurance  Law. 

See  §  100,  Statutory  Construction  Law,  chap.  27  jf  1909,  as  to  eflFect  of 
repeal  and  re-enactment  of  prior  statutes. 

§  158.    Extension  of  charter. 

Any  domestic  marine  insurance  corporation  may  at  any  time 
have  its  original  charter  extended  for  a  period  not  exceeding  thirty 
years,  by  filing  in  the  office  of  the  superintendent  of  insurance  a 
copy  of  such  charter  as  amended  and  a  consent  thereto  signed  by 
all  of  its  directors  or  by  two-thirds  of  them,  and  not  less  than  thir- 
teen in  number.  It  shall  not  be  authorized  to  transact  any  busi- 
ness under  its  extended  charter  until  tlie  same  proceedings  have 
been  taken  as  are  required  by  law  upon  the  filing  of  an  original 
declaration  and  charter,  and  until  the  certificate  of  the  superin- 
tendent required  by  law  shall  have  been  obtained  authorizing  it 
to  transact  business  thereunder. 

Any  corporation  whose  charter  has  been  so  amended  and  which 
has  obtained  the  authority  of  the  superintendent  to  transact  busi- 
ness thereunder  may  continue  its  business  upon  the  same  plan,  and 
without  any  interruption  of  its  business  or  distribution  of  its 
assets,  as  fully  and  with  like  effect  as  if  it  had  been  originally 
incorporated  for  the  extended  period. 

Source. — Former  §  158;  originally  revised  fropi  L.  1849,  chap.  308,  §  14,  as 
amended  by  L.  1889,  chap.  424;  L.  1867,  chap.  442,  §  2,  as  amended  by  L.  1868, 
chap.  731. 


290  The  Insueance  Law.  §  159. 

See  §  37,  General  Corporation  Law,  chap.  28  of  1909.  Extension  of  cor- 
porate existence. 

A  company,  incorporated  by  special  act  before  the  passage  of  the  first 
general  insurance  law  in  1849,  may  extend  its  charter  in  accordance  with  sec- 
tion 158  of  the  Insurance  Law  and  continue  to  operate  under  its  original 
charter,  subject  to  the  limitations  contained  in  section  37  of  the  Insurance 
Law.     Attorney-General  Rep.,  March  21,  1912. 

§  159.    Change  in  plan  of  insurance. 

Any  domestic  mutual  marine  insurance  corporation  may,  by 
conforming  its  charter  and  otherwise  proceeding  in  accordance 
with  the  laws  of  the  state,  with  the  consent  of  three-fourths  of 
the  whole  number  of  its  directors  and  with  the  written  consent 
of  three-fourths  of  the  whole  amount  of  the  outstanding  scrip,  after 
giving  notice  once  a  week  for  six  weeks  of  its  intention  in  two 
newspapers,  to  be  designated  by  the  superintendent  of  insurance, 
change  the  plan  of  its  business  from  that  oi  a  mutual  insurance 
corporation  to  that  of  a  capital  stock  corporation,  by  converting 
the  outstanding  certificates  of  profits  of  those  so  consenting  into 
capital  stock  in  shares  of  not  less  than  fifty  dollars  each,  in  such 
period  of  time  and  at  such  price  not  exceeding  its  par  value  and 
under  such  conditions  and  regulations  as  such  directors  may  fix  and 
establish  for  that  purpose;  and,  may,  upon  application  therefor 
being  made  to  the  corporation  by  the  holders  thereof,  convert  the 
remaining  outstanding  certificates  of  profits  in  whole  or  in  part 
into  capital  stock,  or,  at  the  option  of  the  holders,  redeem  the  same 
at  the  market  price  or  value  thereof,  to  be  determined  by  a  dis- 
interested person  appointed  by  a  judge  of  a  court  of  record  of 
this  state.  The  capital  stock  thus  created  shall  in  no  case  exceed 
the  cash  value  of  tlie  assets  of  the  corporation,  which  shall  not  be 
less  than  two  hundred  and  fifty  thousand  dollars. 

No  such  corporation  shall  change  the  plan  of  its  business  to  that 
of  a  capital  stock  corporation  until  the  superintendent  of  insurance 
shall  first  have  examined  into  the  cash  value  of  its  assets  and  shall 
have  issued  his  certificate  that  the  corporation  has  complied  with 
the  provisions  of  this  section  and  is  in  a  safe  and  proper  condition 
to  continue  the  business  of  marine  insurance,  a  copy  of  which  cer- 
tificate shall  be  recorded  in  the  ofiice  of  tlie  superintendent  and  in 
the  clerk's  office  of  tlie  county  where  its  principal  office  is  located. 
Source. — Former  §  159;  originally  revised  from  L.  1884,  chap.  95,  §  1. 


§   160.  ]\1aki.\k    L\sri:AA(i:   Coin-ou-ATiONS.  291 

§  160.    Charges  for  insurance  upon  canals  of  the  state. 

ISTo  marine  insurance  corporation  doing  business  in  this  state 
shall  demand  or  receive  upon  any  policy  of  insurance  issued  by  it 
upon  property  in  transit  upon  the  canals  of  the  state,  for  the  pre- 
mium on  such  policy,  any  sum  of  money  as  compensation,  whicli 
shall  include  in  any  case  over  fifteen  per  cent  thereof,  as  a  price  or 
remuneration  of  agents  of  the  corporation  for  the  business  of  ob- 
taining such  insurance  on  a  salary  or  commission,  or  in  any  capac- 
ity whatever.  'No  such  corporation  shall  pay  beyond  the  amount 
of  fifteen  per  centum  of  the  premiums  so  received  on  account  of  any 
such  policy  as  the  commission  or  remuneration  of  the  agent  or 
agents  obtaining  the  insurance,  and  no  part  of  the  eighty-five  per 
centum  of  the  premium  retained  by  the  corporation  shall  be  paid  to 
any  one  except  to  the  regular  officers  of  the  corporation  for  its 
benefit,  and  no  shipper  or  middleman  or  other  person  shall  either 
directly  or  indirectly  be  paid  or  receive  any  portion  of  such 
premium. 

An  agent  of  any  such  corporation,  or  other  person,  shall  not 
charge  or  receive,  directly  or  indirectly,  from  any  person  or  persons 
for  insurance  of  such  property,  any  more  than  the  regular  rates  of 
premium  fixed  by  the  corporation  for  the  insurance  of  such  proph 
erty,  or  charge  or  receive  any  other  or  greater  simi  for  such  insur- 
ance than  the  amounts  payable  to  the  corporation  and  its  agents  as 
provided  in  this  section.  In  all  reports  to  the  superintendent  of  in- 
surance required  by  law  every  such  corporation  shall  verify  under 
oath  to  such  superintendent  in  such  form  as  he  may  prescribe,  that 
the  corporation  has  performed  and  fully  carried  out  the  provisions 
of  this  section. 

Any  agent,  shipper  or  other  person  who  shall  violate  any  of  the 
provisions  of  this  section  shall  forfeit  to  the  people  of  the  state  the 
sum  of  one  hundred  dollars,  one-half  of  which  shall  be  paid  to  the 
person  injured,  if  he  shall  complain;  the  other  half,  or  the  whole 
thereof  when  any  other  than  the  injured  person  shall  complain, 
shall  be  paid  to  the  treasury  of  the  county  in  which  the  offense  was 
committed,  for  the  benefit  of  the  poor  of  the  city  or  town  in  which 
such  offense  was  committed.  Any  corporation  violating  the  pro- 
visions of  this  section  shall  be  deemed  to  have  forfeited  its  charter, 


292  The  Insurance  Law.  §§  161,   162. 

and  the  attorney-general,  upon  information  from  the  superintend- 
ent of  insurance,  or  upon  the  complaint  of  any  individual  who  shall 
give  security,  to  be  approved  by  the  superintendent,  for  the  pay- 
ment of  any  costs  or  expenses  on  the  part  of  the  state,  shall  proceed 
against  any  such  corporation  so  violating  the  provisions  of  this 
section  to  enforce  the  forfeiture  of  its  charter.  The  court  in  which 
any  such  suit  or  proceeding  may  be  instituted  may,  upon  final  judg- 
ment instead  of  decreeing  the  dissolution  of  the  corporation,  require 
it  to  pay  such  sum  as  a  penalty  for  such  violation  not  less  than 
five  hundred  dollars,  nor  more  than  five  thousand  dollars,  as  the 
court  may  in  its  discretion  impose,  and  direct  in  the  judgment  that 
in  case  such  penalty  is  not  paid  within  a  time  therein  specified  the 
corporation  shall  be  dissolved. 

Source. — Former    §    160;    originally    revised    from    L.    1881,   chap.    471,    as 
amended  by  L.  1883,  chap.  455. 

§  161.    Agencies  beyond  the  United  States. 

Any  domestic  marine  insurance  corporation  may  establish  and 
maintain  one  or  more  agencies  beyond  the  United  States  for  the 
transaction  of  its  lawful  business  upon  such  terms  and  conditions 
as  it  may  prescribe,  and  may  omit  from  its  annual  report  the 
transactions  at  any  such  agency  in  Asia  or  Europe  for  five  montlis 
previous  to  the  time  when  the  report  is  made,  but  such  omitted 
transactions  shall  be  included  in  the  next  annual  report. 

Source.— Former  §  161 ;  originally  revised  from  L.  1852,  chap.  123. 

§  162.    Lloyds  or  individual  underwriters. 

Source. — Former  §  102,  as  amended  by  L.  1905,  chap.  566. 
Repealed  by  L.  1910,  chap    638  (in  effect  Jan.  1,  1911). 


§   170.       Title  and  Credit  Guakanty  Cokpokations.  293 

AKTICLE  V. 

Title  and  Credit   Guaranty   Corporations. 
Section  170.  Incorporation. 

171.  Subscriptions  to  capital  stock. 

172.  By-laws. 

173.  Certificate  of  superintendent. 

174.  Certificate  of  payment  of  capital  stock. 

175.  Directors. 

176.  Investment  of  capital  and  funds  of  a  title  guarantee  corporation. 

177.  Conditions  requisite  to  commencing  business  of  a  credit  guaranty 

corporation. 

178.  Powers  of  credit  guarantee  corporations. 

179.  Merger. 

180.  Additional  powers  of  certain  title  guaranty  companies. 

181.  May  execute  bonds  and  undertakings. 

182.  Issuance   of   certificate    of    solvency   by    superintendent    of    in- 

surance. 

183.  Supreme  court  may  require  statement  to  be  tiled. 

Section  170.     Incorporation. 

Five  or  more  persons  may  form  a  corporation  for  one  of  the 
following  purposes : 

1.  To  examine  titles  to  real  property  and  chattels  real,  to  pro- 
cure and  furnish  information  in  relation  thereto,  make  and  guar- 
antee the  correctness  of  searches  for  all  instruments,  liens  or  charges 
affecting  the  same,  guarantee  or  insure  the  payment  of  bonds  and 
mortgages,  or  notes  of  individuals  or  partnerships  secured  by 
mortgages  upon  real  property  situated  in  this  or  any  other  state, 
and  bonds,  notes,  debentures  and  other  evidences  of  indebted- 
ness of  solvent  corporations  secured  by  deed  of  trust  or  mortgage 
upon  real  property  situated  in  this  or  any  other  state,  invest  in, 
purchase  and  sell,  with  such  guarantee  or  with  guarantee  only 
against  loss  by  reason  of  defective  title  or  incumbrances,  bonds 
and  mortgages,  and  notes  of  individuals  or  partnerships  secured 
by  mortgages  upon  improved  and  unincumbered  real  property 
situated  in  this  or  any  other  state  worth  fifty  per  centum  more 
than  the  amount  loaned  thereon,  and  bonds,  notes,  debentures 
and  other  evidences  of  indebtedness  of  solvent  corporations  se- 
cured by  deed  of  trust  or  mortgages  upon  improved  and  unin- 
cumbered real  property  situated  in  this  state  or  outside  of  this 


294  The  Insurance  Law.  §  170. 

state  worth  fifty  per  centum  more  than  the  amount  loaned  thereon, 
and  guarantee  and  insure  the  owners  of  real  property  and  chattels 
real  and  others  interested  therein  against  the  loss  by  reason  of 
defective  titles  thereto  and  other  incumbrances  thereon  which  shall 
be  known  as  a  title  guaranty  corporation ;  or 

1-a.  To  guarantee  the  validity  and  legality  of  bonds  or  other 
evidences  of  indebtedness  issued  by  any  state  or  by  any  city, 
county,  tov^n,  village,  school  district,  municipality  or  other  civil 
division  of  any  state,  or  by  any  private  or  public  corporation;  to 
act  as  registrar  or  transfer  agent,  but  not  fiscal  of  any  such  corpo- 
ration, and  to  transfer  and  countersign  its  certificates  of  stocks, 
^onds  or  other  evidences  of  indebtedness.  Such  corporation  shall 
be  known  as  a  securities  guaranty  corporation  and  shall  be  gov- 
erned by  and  subject  to  the  provisions  of  law  applicable  to  a  title 
guaranty  corporation  organized  under  this  article;  or 

2.  To  guarantee  and  indemnify  merchants,  traders  and  those 
engaged  in  business  and  giving  credit  from  loss  and  damage  by 
reason  of  giving  and  extending  credit  to  their  customers,  and  those 
dealing  with  them,  which  shall  be  known  as  a  credit  guaranty  cor- 
poration, by  making,  acknowledging  and  filing  a  certificate  stating : 

1.  The  name  of  the  proposed  corporation. 

2.  The  kind  of  corporation  to  be  formed  and  its  purposes. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The  location  of  its  office. 

5.  The  duration  of  the  corporation,  not  exceeding  fifty  years. 

No  credit  guaranty  corporation  or  securities  guaranty  corpora- 
tion shall  be  formed  for  the  transaction  of  business  in  this  itate, 
with  a  smaller  capital  than  two  hundred  and  fifty  thousand 
dollars.  IN^o  title  guaranty  corporation  shall  be  formed  with  a 
smaller  capital  than  one  hundred  and  fifty  thousand  dollars,  which 
shall  be  divided  into  shares  of  one  hundred  dollars  each.  Such 
certificate  shall  be  filed  in  the  office  of  the  superintendent  of  in- 
surance, who  shall  thereupon  issue  a  license  to  the  persons  making 
such  certificate,  empowering  them  as  commissioners  to  open  books 
of  subscription  to  the  capital  stock  of  the  corporation  at  such  times 
and  places  as  they  may  determine. 

Any  corporation  heretofore  organized  under  subdivision  one 
of  this  section  shall  have  all  the  powers  conferred  by  such  sub- 
division as  amended  hereby. 


§  170.         Title  and  Ckedit  Guakanty  Cokpokations.  295 

Source.— Former  §  170,  as  amended  by  L.  1900,  eliap.  266;  L.  1901,  chap.  677; 
L.  1904,  ohap.  543;  originally  revised  from  L.  1885,  chap.  538,  §§  1,  3,  4,  10, 
28;  L.  1886,  chap.  611,  §§  1,  2,  3,  5,  14. 

Amended  by  L.  1909,  chap.  302;  L.  1911,  dhap.  525;  L.  1913,  chaps.  81  and 
215. 

Note. — This  section  was  amended  by  chaptersi  81  and  215  of  1913.  The 
amendment  by  chapter  81  went  into  effect  March  15,  1913,  and  consisted  of 
adding  the  words  "  or  securities  guaranty  corporation  "  in  subdivision  5,  in- 
creased the  capital  from  $150,000  to  $250,000  and  in  the  same  subdivision 
struck  out  the  words  "  or  with  a  larger  capital  than  $10,000,000."  The  amend- 
ment by  chapter  215  of  1913  went  into  effect  April  4,  1913,  and  amended  sub- 
division 1  by  permitting  insurance  on  notes  secured  by  mortgages,  made  the 
same  changes  in  subdivision  5  as  were  made  by  chapter  81  and  added  the 
last  paragraph. — Ed. 

See  §  6,  ante.    Fees  to  superintendent  for  filing  declaration. 

See  §  9,  ante.    Certificate  of  authorization  of  superintendent. 

See  §  10,  ante.     Certificate  of  attorney-general;  corporate  names. 

See  §  11,  ante.    Examination  by  superintendent  as  to  capital. 

See  §  13,  ante.    Deposit  of  securities  with  superintendent. 

See  §  174,  post.    Certificate  of  payment  of  capital  stock. 

See  §  177,  post.    Conditions  requisite  to  commencing  business. 

See  chap.  733  of  1900.    Reincorporation  of  foreign  moneyed  corporations. 

A  corporation  may  not  be  organized  under  the  Business  Corporations  Law 
to  engage  in  the  business  of  examining  and  certifying  the  titles  to  real  prop- 
erty.   Attorney-General  Rep.,  1912,  page  345. 

TITLES. —  A  corporation  organized  for  the  purpose  of  examining  and 
guaranteeing  titles  to  real  estate,  which,  in  all  matters  relating  to  convey- 
ancing and  searching  titles  assumes  to  discharge  the  same  duties  as  an 
individual  conveyancer  or  attorney,  is  subject  to  the  same  responsibilities, 
and  its  duty  to  its  employer  is  governed  by  the  principles  applicable  to 
attorney  and  client.    Ehmer  v.  Title  G.  &  T.  Co.,  156  N.  Y.,  10. 

A  policy  of  insurance  issued  by  a  title  guarantee  corporation  containing 
a  provision  "  that  defects  and  incumbrances  arising  after  the  date  of  this 
policy,  or  created  or  suffered  by  the  insured,  and  assessments  not  confirmed 
at  the  date  of  this  policy,  are  not  to  be  deemed  covered  by  it,"  covers  a 
confirmed  assessment  existing  at  the  date  of  the  policy,  although  the  con- 
firmation took  place  after  the  grantee  took  possession  under  his  deed. 
Trenton  Co.  v.  Title  Guarantee  Co.,  50  App.  Div.,  490. 

A  corporation  organized  under  the  business  corporation  law  for  the  pur- 
pose of  conducting  the  business  of  a  mercantile  reporting  company  is  entitled 
to  amend  its  certificate  of  incorporation  so  as  to  assume  a  responsibility 
to  its  clients  for  the  accuracy  of  its  reports  and  such  amendment  does  not 
contemplate  an  insurance  business  within  the  meaning  of  subdivision  2  of 
§  170.    People  ex  rel.  Daily  Credit  Service  Corp.  v.  May,  162  App.  Div.,  215. 

A  company  "  to  guarantee  and  indemnify  banks  from  loss  and  damage  by 
reason  of  their  having  given  an  extended  credit  to  customers  in  the  regular 
course  of  business,"  is  authorized  under  this  section.  Attorney-General  Rep., 
1906,  page  554. 

A  title  company,  organized  to  do  business  specified  in  §  170,  subd.  1,  cannot 
accept  deposits  of  money  from  individuals  and  issue  in  exchange  therefor  cer- 


296  Tjie  Insurance  Law.  »§  171. 

tificates  of  indebtedness,  which  will  provide  that  the  moneys  received  shall  be 
merged  with  the  general  funds  and  invested  in  mortgage  loans,  the  holders  of 
the  certificate  to  receive  4  per  cent  interest  and  the  company  to  have  the 
option  to  give  the  holder  at  any  time  a  guaranteed  mortgage  at  5l^  per  cent 
equal  tc  the  amount  of  such  deposit,  or  a  certificate  giving  the  holder  an  inter- 
est in  a  larger  guaranteed  mortgage  at  the  same  rate,  which  interest  shall  be 
equal  to  the  amount  of  such  deposit.    Attorney-General  Rep.,  Dec.  6,  1910. 

CERTIFICATE. —  The  superintendent  of  the  insurance  department  may,  in 
his  discretion,  issue  to  a  foreign  credit  guarantee  insurance  company  a 
certificate  authorizing  it  to  transact  business  in  this  state.  Attorney- 
General  Rep.,  1892,  page  375. 

INCORPORATION. —  Two-thirds  of  the  persons  executing  a  certificate  of 
incorporation  of  a  credit  guarantee  company  must  be  citizens  of  the  United 
States,  and  a  majority  of  them  residents  of  this  state.  In  re  Com.  Credit 
Guar.  Co.,  Attorney-General  Rep.,  1893,  page  139. 

BUSINESS. —  A  foreign  company  should  not  be  allowed  to  do  business, 
both  as  provided  by  art.  V  and  by  §  70,  subd.  4  of  the  Insurance  Law. 
In  re  Ocean  Ace.  &  Guar.  Co.,  Attorney-General  Rep.,  1897,  page  230. 

A  proposed  mortgage  insurance  company,  licensed  by  the  superintendent 
of  insurance  to  open  stock  subscription  books,  cannot  organize  on  a  smaller 
capital  than  that  specified  in  the  license.  Reduction  of  capital  stock  can  be 
effected  only  in  the  manner  specified  in  §§  45  and  46  of  the  Stock  Corpora- 
tion Law.  In  re  N.  Y.  Mortgage  Ins.  Co.,  Attorney -General  Rep.,  1893, 
page  84. 

CREDIT  COMPANY. —  Credit  guaranty  companies  are  moneyed  corpora- 
tions, and  cannot  be  formed  under  the  provisions  of  the  Business  Corporation 
Law.    In  re  Com.  Guar.  Co.,  Attorney -General  Rep.,  1893,  page  308. 

TITLE  COMPANY. —  A  foreign  title-searching  company  is  a  moneyed  cor- 
poration, and  cannot  be  authorized  by  the  secretary  of  state  to  do  business  in 
this  state.  In  re  New  Jersey  Title,  etc.,  Co.,  Attorney-General  Rep.,  1893, 
page  92. 

BONDS. —  Bonds  of  a  real  es.tate  title  and  mortgage  guarantee  corporation 
secured  by  niurt;^'ages  deposited  with  a  trustee  under  an  agreeuieiit  permitting 
substitution  of  mortgages  is  lawful.    Attorney-General  Rep.,  May  1,  1915. 

§  171.    Subscriptions  to  capital  stock. 

Such  commissioners  shall  open  hooks  for  suhscription  to  the 
capital  stock  of  the  corporation.  No  subscription  shall  be  received 
unless  at  the  time  of  making  it,  the  person  so  subscribing  shall  pay 
to  the  commissioneiri  ten  per  cent  of  the  par  value  of  the  stock 
subscribed  for  in  cash. 

When  one-third  of  the  capital  stock  has  been  subscribed  the 
commissioners  shall  call  a  meeting  of  the  subscribers  to  adopt  by- 
laws for  the  corporation  and  elect  directors  thereof.     Notice  of 


§  1725.      Title  and  (Credit  Guaranty  Corporations.  2i97 

such  meeting  shall  be  given  to  every  subscriber  by  depositing  in 

the  post-office  properly  addressed  to  him  at  his  last  known  place  of 

residence  and  postage  i)i'c'[)aid,  at  least  five  days  before  tlie  I  hue 

fixed,  a  written  or  printed  notice  stating  the  time,  place  and  object 

of  the  meeting. 

Source. — Former  §  171;  originally  revised  from  L.  1885,  chap.  538,  §  5;  L. 
1886,  chap.  611,  §  6. 

See  §  23,  General  Corporation  Law,  chap.  563  of  1890.  Qualifications  of 
voters. 

See  §  53,  Stock  Corporation  Law,  chap.  61  of  1909.  Subscriptions  to  capital 
atock. 

See  §  660,  Penal  Law.    Frauds  in  the  organization  of  corporations. 

See  §  662  et  seq.    Fraudulent  issue  of  stock. 

CAPITAL. —  A  proposed  mortgage  insurance  company,  licensed  by  the 
superintendent  of  insurance  to  open  stock  subscription  books,  cannot  organize 
on  a  smaller  capital  than  that  specified  in  the  license.  In  re  New  York 
Mortgage  Insurance  Co.,  Attorney-General  Rep.,  1893,  page  84. 

§  172.    By-laws. 

The  by-laws  of  every  corporation  created  under  the  provisions 
of  this  article  shall  be  deemed  and  taken  to  be  its  law,  and  shall 
provide : 

1.  The  number  of  its  directors. 

2.  Their  terms  of  office,  so  arranged  that  at  least  one-fourth  in 
number  of  all  the  directors  shall  be  elected  annually. 

3.  The  manner  of  filling  vacancies  among  directors  and  officers. 

4.  The  time  and  place  of  the  annual  meeting. 

5.  The  manner  of  calling  and  holding  special  meetings  of 
stockholders. 

6.  The  number  of  stockholders  who  shall  attend  either  in  person 
or  by  proxy  at  every  meeting  to  constitute  a  quorum. 

7.  The  officers  of  the  corporation  and  manner  of  their  election 
by  the  directors,  and  their  powers  and  duties.  Such  officers  shall 
always  include  a  president,  secretary,  treasurer,  and  a  general  man- 
ager.    The  president  must  be  elected  from  among  the  directors. 

8.  The  manner  of  electing  or  appointing  inspectors  of  election. 

9.  The  manner  of  amending  or  repealing  the  by-laws. 

Source. — Former  §  172,  as  amended  by  L.  1903,  chap.  135;  originally  revised 
from  L.  1885,  chap.  538,  §  6. 


298  The  Insurance  Law.  §§  173,  174. 

Amended  by  L.  1913,  chap.  49. 

Note. — The  purpose  of  the  amendment  of  this  section  by  chapter  49  of  1913 
was  to  require  title,  credit  and  securities  guaranty  corporations  to  elect  their 
directors  in  such  a  manner  that  at  least  one-fourth  of  all  such  directors  shall 
be  elected  annually. — Ed. 

See  §  175,  post.   Directors,  number,  quorum,  etc. 

See  §  11,  subd.  6,  General  Corporation  Law,  chap.  563  of  1890.  By-la wb  to 
control  action  of  directors. 

§  173.    Certificate  of  superintendent. 

Within  ten  days  after  such  meeting  the  commissioners  shall 
file  in  the  office  of  the  superintendent  of  insurance  a  verified  rec- 
ord of  the  proceedings  thereof,  containing  a  copy  of  the  subscrip- 
tion list,  a  copy  of  the  by-laws  adopted,  and  the  names  of  the 
directors  chosen.  Thereupon  the  superintendent  shall  issue  to  such 
directors  the  certificate  required  by  this  chapter,  which  shall  in- 
clude a  copy  of  the  original  certificate  provided  in  section  170,  the 
date  and  place  of  the  subscribers'  meeting  the  names  of  the 
directors  elected  and  a  statement  that  all  the  provisions  of  this 
article  have  been  fully  observed  in  the  organization  of  the 
corporation. 

Upon  every  amendment  of  the  by-laws  of  such  corporation,  a 
copy  of  the  amended  by-laws,  duly  certified  under  the  seal  of  the 
corporation,  shall  be  filed  in  the  office  of  the  superintendent  of  in- 
surance and  of  such  county  clerk,  and  shall  not  take  effect  until  so 
filed.  Unless  such  corporation  shall  be  fully  organized  as  provided 
in  this  section  within  one  year  after  the  issuing  of  the  license  to 
the  commissioners  to  open  books,  such  license  shall  be  deemed  to 
be  revoked  and  all  proceedings  thereunder  shall  be  void. 

Source.— Former  §  173;  originally  revised  from  L.  1885,  chap.  538,  §§  7,  8. 

§  174.    Certificate  of  payment  of  capital  stock. 

The  capital  stock  of  every  corporation  organized  under  this 
article  shall  be  paid  in,  one-third  thereof  within  one  year  and  the 
other  two-thirds  thereof  within  two  years  from  its  incorporation, 
or  such  corporation  shall  be  dissolved.  The  directors  of  every 
such  corporation,  within  thirty  days  after  the  payment  of  the  last 
installment  of  the  capital  stock,  shall  make  a  certificate  stating  the 
amount  of  the  capital  so  paid  in,  which  shall  be  signed  and 
sworn  to  by  the  president  and  a  majority  of  the  directors,  and 
shall  be  recorded  in  the  office  of  the  superintendent  of  insurance 


§§  1T5, 176.     Title  and  Credit  -Guaranty  Corporations.     299 

and  of  the  clerk  of  the  county  in  which  the  principal  office  of  the 
corporation  is  situated. 

Source. — Former  §  174;  originally  revised  from  L.  1885,  chap.  538,  §  24. 

CAPITAL. —  The  capital  stock  of  foreign  credit  guarantee  companies  must 
be  paid  in  in  cash,  one-third  thereof  within  one  year,  and  the  other  two- 
thirds  thereof  within  two  years  from  their  incorporation.  Attorney-General 
Rep.,  1893,  page  164. 

§  175.    Directors. 

Every  director  of  any  such  corporation  shall  be  a  stockholder 
to  the  extent  of  at  least  five  shares  of  stx3ck.  The  corporation  shall 
have  such  offices  as  shall  be  prescribed  in  its  by-laws.  There  shall 
not  be  less  than  five  nor  more  than  twenty  directors,  and  the  num- 
ber originally  fixed  by  the  by-laws  of  the  corporation  mav  bo 
changed  at  a  special  meeting  of  the  owners  of  a  majority  of  the 
whole  amount  of  the  capital  stock  of  the  corporation,  called  pur- 
suant to  notice  specifying  the  purpose  of  the  meeting,  which  shall 
be  served  in  the  manner  prescribed  in  section  one  hundred  and 
seventy-one.  The  vote  of  a  majority  of  the  stockholders  in  person 
or  by  attorney  duly  authorized  for  that  purpose  shall  be  necessary 
to  such  change.  A  majority  of  the  whole  number  of  directors  shall 
be  necessary  to  constitute  a  quorum.  The  secretary  shall  record 
all  the  votes  of  the  corporation  and  the  minutes  of  its  transactions 
and  of  the  board  of  directors,  in  a  book  to  be  kept  for  that  purpose. 
The  treasurer  shall  give  bonds  in  such  sum  and  with  such  sureties 
as  are  required  by  the  by-laws  for  the  faithful  discharge  of  his 

duties. 

Source.— Former  §  175,  us  amended  by  L.  1903,  chap.  135;  originally  revised 
from  L.  1885,  chap.  538,  §  3;  L.  1886,  dhap.  611,  §  9,  as  amended  hy  L.  1891, 
chap.  80. 

See  §  34,  General  Corporation  Law,  chap.  28  of  1909.  Quorum  of  directors 
and  powers  of  majority. 

See  §§  25-31,  Stock  Corporation  Law,  chap.  61  of  1909.  Directors  and  offi- 
cers, their  election  and  powers. 

§  176.  Investment  of  capital  and  funds  of  a  title  guaranty 
corporation. 

The  capital  and  funds  accumulated  in  the  course  of  its  business 
of  every  such  title  guaranty  corporation  shall  be  invested  in  the 
same  kind  of  securities  as  the  capital  and  stock  of  insurance  cor- 
porations are  required  by  this  chapter  to  be  invested.  Every  such 
corporation  shall  set  apart  a  sum  not  less  than  two-thirds  of  the 


300  The  Insurance  Law.  §  176. 

amount  of  its  capital  stock  as  a  guaranty  fund,  and  shall  invest  the 
same  in  the  kinds  of  securities  in  which  it  is  permitted  to  invest  its 
capital. 

No  such  corporation  shall  issue  any  guaranty  or  policy  of  insur- 
ance upon  bonds  and  mortgages  or  to  owners  of  real  property  and 
others  interested  therein  against  loss  by  reason  of  defective  titles 
and  other  incumbrances,  until  such  sum  has  been  so  set  apart  and 
invested. 

Such  fund  shall  be  kept  and  applied  for  the  security  and  pay- 
ment of  losses  and  expenses  which  may  be  incurred  by  reason  of 
the  guaranty  or  insurance  made  as  aforesaid,  and  shall  not  be  sub- 
ject to  other  liabilities  of  the  corporation  to  the  extent  of  and  so 
long  as  any  such  guaranty  or  insurance  is  outstanding.  If  an  in- 
crease of  its  capital  stock  is  made  by  any  such  corporation,  two- 
thirds  of  such  increase  shall  be  set  apart  and  added  to  the  guar- 
anty fund  thereof  and  kept  and  invested  as  above  provided.  When, 
on  account  of  losses  or  otherwise,  the  amount  of  the  guaranty  fund 
of  any  such  corporation  shall  fall  below  such  sum  as  was  required 
to  be  set  apart  and  invested  by  this  section,  no  further  guaranty 
or  insurance  shall  be  issued  until  the  deficiency  below  the  amount 
80  required  has  been  supplied.  Every  corporation  organized  un- 
der the  provisions  of  subdivision  one  of  section  one  hundred  and 
seventy  of  this  chapter  shall  make  and  file  with  the  superin- 
tendent of  insurance  on  or  before  the  thirty-first  day  of  January 
of  each  year,  a  report  in  writing,  setting  forth  the  aggregate 
amount  of  the  bonds  and  mortgages  outstanding  on  the  thirty-first 
day  of  the  preceding  December  the  payment  of  the  principal  and 
interest  of  which  has  been  guaranteed  by  such  corporation. 

Source. — Former  §  176,  as  amended  by  L.  1904,  chap.  543;  originally  revised 
from  L.  1886,  chap.  611,  §  11. 

See  §  16,  ante.    Investment  of  capital  and  surplus. 

CAPITAL. —  A  sum  of  money  used  in  acquiring  a  plant,  consisting  of 
abstract  of  title,  documents,  copies  from  records  and  other  property  necessary 
to  the  transaction  of  the  business  of  the  title  guaranty  company  is  in 
accordance  with  the  provisions  of  the  Insurance  Law.  Matter  of  Long  Island 
Title  Guaranty  Company,  Attorney-General  Rep.,  1897,  page  210;  February 
14,   1896. 

The  requirement  in  relation  to  setting  aside  a  part  of  the  capital  stock  as 
a  guarantee  fund  will  not  be  satisfied  if,  pending  final  payment  of  its  entire 
authorizwl  capital,  the  corporation  seta  apart  two-thirds  of  its  actual  paid-up 
capital  as  a  guarantee  fund;  such  corporation  must  set  a^part  a  sum  not  ]ess 
than  two-thirds  of  its  capital  stock.    Attorney-General  Rep.,  April  29,  1893. 


§§  ITY,  178.     Title  and  Credit  Guaranty  Corpoiiations.     301 

§  177.  Conditions  requisite  to  commencing  business  of  a 
credit  guaranty  corporation. 

'No  credit  guaranty  corporation  shall  commence  business  before 
twenty-five  per  centum  of  its  capital  shall  be  paid  in,  nor  until  it 
shall  have  deposited  with  the  superintendent  of  insurance  the  sum 
of  one  hundred  thousand  dollars  as  security  for  its  policy  holders. 

Source, — Former  §  177;  originally  revised  from  L.  1886,  chap.  611,  §  11. 

See  §  13.  Deposit  of  securities  with  superintendent  before  commencing 
business. 

DEPOSIT. —  A  foreign  credit  guaranty  company,  in  order  to  do  business 
in  this  state,  must  keep  on  deposit  with  a  fiscal  officer  of  the  state  in  which 
it  is  incorporated  the  same  amount  of  securities  as  a  like  domestic  corpora- 
tion is  required  to  deposit  with  the  superintendent  of  this  state.  Attorney- 
General  Rep.,  1893,  page  75. 

A  deposit  made  pursuant  to  section  177  is  for  the  protection  only  of  policy- 
holders as  defined,  and  not  for  other  creditors  of  the  depositing  corporation. 
Attorney-General  Rep.,  Dec.  6,  1894. 

§  178.    Powers  of  credit  guaranty  corporations. 

Any  such  credit  guaranty  corporation  shall  have  the  right,  power 
and  authority  to  guaranty  from  loss,  and  to  agree  to  pay  to  mer- 
chants, manufacturers,  dealers  and  persons  engaged  in  business  and 
giving  credit,  the  debts  owing  to  them,  and  to  indemnify 
them  from  loss,  and  to  charge  or  receive  therefor  such  a  sum  or 
percentum  as  the  consideration  for  such  agreement,  guaranty  and 
indemnity  as  shall  be  agreed  upon  between  such  corporation  and 
the  persons  guaranteed,  and  to  buy,  hold,  own  and  take  an  assign- 
ment of  any  and  all  claims,  accounts  and  demands  so  guaranteed, 
and  to  hold,  own  and  collect  the  same,  and  to  enforce  the  collection 
thereof  by  action  the  same  as  the  original  holder  and  owner  thereof 
might  or  could  do;  also  to  insure  the  payment  of  money  for  per- 
sonal services  under  contract  of  hiring.  No  corporation  transact- 
ing credit  guaranty  business  in  this  state  shall  advertise  any  assets 
or  capitalization  which  are  not  held  at  the  sole  and  exclusive  risk 
of  such  business.  Any  such  corporation  may  use  its  capital  stock 
or  its  funds  accumulated  in  the  course  of  its  business  to  purchase 
or  pay  for  any  claim  or  demand,  the  payment  of  which  it  hac  guar- 
anteed or  does  guarantee ;  and  such  of  its  capital  stock  or  funds  as 
may  not  be  so  used  shall  be  invested  in  the  securities  in  which  the 
capital  and  funds  of  insurance  corporations  are  required  by  the  pro- 
visions of  this  chapter  to  be  invested.     When  an  examination  is 


302  The  Insurance  Law.  .        §  179. 

made  by  the  autbority  of  the  superintendent  of  insurance  into  the 
affairs  of  any  credit  guaranty  corporation  doing  business  in  this 
state,  or  when  such  corporation  renders  a  statement  to  the  insurance 
department,  there  shall  not  be  allowed  as  assets  any  investments 
which  are  not  held  as  prescribed  by  law  at  the  date  of  such  exami- 
nation or  rendering  such  statement ;  but  unpaid  premiums  on  poli- 
cies written  within  three  months  shall  be  admitted  as  available  re- 
Bources.  In  estimating  its  liabilities,  there  shall  be  charged,  in 
addition  to  the  capital  stock  and  all  outstanding  claims,  a  sum 
equal  to  the  total  unearned  premiums  on  the  policies  in  force,  cal- 
culated on  the  gross  sum  without  any  deduction  on  any  account, 
charged  to  the  policy  holders  on  each  respective  risk  from  the  date 
of  the  issue  of  the  policy. 

Source. — Former  §  178,  as  amended  by  L.  1S97,  chap.  387,  and  L.  1898,  chap. 
140;  originally  revised  from  L.  1886,  chap.  611,  §§  4,  7. 

See  §  70,  subd.  4,  ante.  Corporations  may  be  incorporated  under  this 
■ection  to  guarantee  fidelity  of  persons,  etc. 

CAPITAL. —  The  Insurance  Law  does  not  authorize  the  issuing  of  stock 
as  "  paid  up "  where  such  stock  is  exchanged  for  copyrights,  plans,  forms, 
blanks  and  statistical  tables  upon  which  the  company  operates  and  con- 
ducts its  business.  In  re  National  Credit  Company,  Attorney-General  Rep., 
1893,  page  164. 

§  179.    Merger. 

Any  two  or  more  corporations  organized  under  subdivision  one 
of  section  one  hundred  and  seventy  of  this  chapter,  or  organized 
under  the  laws  of  this  state  for  the  purposes  or  either  of  them 
mentioned  in  subdivision  one  of  section  one  hundred  and  seventy 
of  this  chapter;  or  any  one  or  more  corporations  organized 
under  subdivision  one  of  section  one  hundred  and  seventy  of 
this  chapter,  or  organized  under  the  laws  of  this  state  for  the 
purposes  or  either  of  them  mentioned  in  subdivision  one  of  sec- 
tion one  hundred  and  seventy  of  this  chapter,  and  any  one  or  more 
corporations  organized  under  article  five  of  the  banking  law  or 
under  the  laws  of  this  state  for  the  purposes  or  either  of  them  men- 
tioned in  article  five  of  the  banking  law;  or  any  one  or  more 
corporations  organized  under  s-ubdivision  one  of  section  one 
hundred  <and  seventy  of  tiliis  clmp/ter,  or  orgnnizod  iiiidcr 
the  law®  of  this  statB  for  the  purposes  or  citlicr  of  tlicni  men- 
tioned in  subdivision   one  of  section  one  hundred   and    seventy 


§  179.      Title  and  Cbedit  Guaranty  Corporations.  303 

of  this  chapter,  and  any  one  or  more  corporations  organized 
under  article  seven  of  the  banking  law  or  under  tlie  laws  of 
this  state  for  the  purposes  or  either  of  them  mentioned 
in  article  seven  of  the  banking  law,  are  hereby  authorized  to 
merge  one  or  more  of  said  corporations  into  another  in  the  manner 
following:  The  respective  boards  of  directors  of  such  corporations 
may  enter  into  and  make  an  agreement  under  their  respective  cor- 
porate seals  for  the  merger  of  one  or  more  of  said  corporations  into 
another  of  them,  prescribing  the  terms  and  conditions  thereof  and 
the  mode  of  carrying  the  same  into  effect,  and  may  provide  that 
such  corporations  upon  and  after  such  merger  shall  have  the  name 
of  any  one  of  the  corporations  merged  or  any  other  lawful  name  to 
be  specified  in  said  agreement,  and  may  name  the  persons,  not  less 
than  thirteen  nor  more  than  twenty-four,  who  shall  constitute  the 
board  of  directors  of  such  corporation  after  its  merger,  or  may  pro- 
vide for  a  meeting  of  stockholders  within  sixty  days  after  the 
merger  to  elect  a  board  of  directors  with  such  temporary  provision 
for  conducting  the  aifairs  of  the  corporation  meanwhile  as  shall  be 
agreed  upon ;  and  said  directors  so  named  or  elected,  after  qualify- 
ing, may  divide  themselves  into  classes  in  manner  and  with  effect 
as  provided  in  section  one  hundred  and  ninety-five  of  the  bank- 
ing law,  and  may  adopt  new  by  iawt  for  said  corporation. 
Tlie  agreement  shall  be  subject  to  the  approval  of  tihe  supei-in- 
tendent  of  insiuranoe,  and  if  either  of  the  parties  to  the  agree- 
ment is  a  corporation  organized  under  article  five  or  under 
article  seven  of  the  banking  law,  or  under  the  laws  of  this  state, 
for  the  purposes  or  either  of  them  mentioned  in  article  five 
or  in  article  seven  of  the  'banking  law,  the  agreement  shall  also 
be  subject  to  the  approval  of  the  superintendent  of  banks.  Such 
agreement  shall  be  submitted  to  tlie  stockholders  of  each  of  such 
corporations  at  a  meeting  thereof  to  be  called  upon  notice  of  at  least 
two  weeks,  specifying  the  time,  place  and  object  thereof,  addressed 
to  each  stockholder  at  his  last  known  post-office  address  and  de- 
posited in  the  post-office,  postage  prepaid,  and  published  for  at  least 
two  successive  weeks  in  one  of  the  newspapers  in  each  of  the  coun- 
ties of  this  state  in  which  either  of  such  corporation  shall  have  its 
principal  place  of  business,  and  if  such  agreement  shall  be  approved 
at  each  of  such  meetings  of  the  respective  stockholders  separately, 


I 


304  The  Insueance  Law.  §  179. 

by  the  vote  or  ballot  of  the  stockholders  owning  at  least  two- 
thirds  of  the  stock,  the  same  shall  be  the  agreement  of  such  corpora- 
tions. A  sworn  copy  of  the  proceedings  of  such  meetings,  made  by 
the  secretaries  thereof,  respectively,  shall  be  presumptive  evidence 
of  the  holding  and  action  of  such  meetings.  Such  agreement  and 
certified  copy  of  proceedings  of  such  meetings  shall  be  made  in 
duplicate  and  filed  in  the  office  of  the  superintendent  .'"f  insurance, 
and  in  the  office  of  the  clerk  of  the  county  in  v/hich  the  principal 
place  of  business  of  the  corporation  into  which  such  corporation  or 
corporations  shall  be  merged  is  located ;  and  if  one  of  the  parties 
to  such  agreement  be  a.  corporation  organized  under  article  five 
or  under  article  seven  of  the  banking  law  or  under  the  laws  of 
this  state  for  the  purposes  or  either  of  them  mentioned  in  article 
five  or  in  article  seven  of  tlie  banking  law,  a  third  copy  thereof 
shall  be  filed  in  the  office  of  the  superintendent  of  banks;  and 
the  corporation  into  Which  the  other,  or  others,  are  merged, 
shall  thereafter  have  the  new  name,  if  any,  specified  in  the 
'aforesaid  agreement,  and'  the  pro\dsions  of  such  agreement 
shall  be  carried  into  effect  as  therein  provided ;  and  it  shall 
be  lawful  for  said  coiporation  into  which  the  others  shall  have 
been  merged,  to  require  the  return  of  the  original  certificate  of  stock 
held  by  each  stockholder  in  each  or  either  of  the  corporations,  and 
in  lieu  thereof,  to  issue  new  certificates  for  such  number  of  shares 
of  its  own  stock  as  under  the  agreement  of  merger  the  said  stock- 
holder may  be  entitled  to  receive.  If  any  stockholder  not  voting 
in  favor  of  such  agreement  of  merger  shall,  at  such  meeting  or 
within  twenty  days  thereafter,  object  to  such  merger  and  demand 
payment  for  his  stock,  he  may,  at  any  time,  within  sixty  days  after 
such  merger,  apply  to  the  supreme  court  at  any  special  term  thereof, 
held  in  the  district  in  which  the  county  is  situated,  in  which  such 
corporation  into  which  the  others  may  be  merged  may  have 
its  principal  place  of  business,  upon  at  least  eight  days'  notice  to 
said  corporation,  for  the  appointment  of  three  persons  to  appraise 
the  value  of  his  stock,  and  the  court  shall  appoint  such  appraisers 
and  designate  the  time  and  place  of  their  first  meeting,  with  such 
directions  in  regard  to  their  proceedings  as  shall  be  deemed  proper. 
The  court  may  fill  any  vacancies  in  the  board  of  appraisers  occur- 
ring by  refusal  or  neglect  to  hold  such  office.     The  appraisers  shall 


§   179.       Title  and  Credit  Guaranty  Corporations.  305 

meet  at  the  time  and  place  designated  and  after  being  duly  swoni. 
shall  honestly  and  faithfully  discharge  their  duties  and  estimate 
and  certify  the  value  of  such  stock,  and  deliver  one  copy  to  such 
corporation  and  another  to  such  stocldiolder,  if  demanded;  the 
charges  and  expenses  of  the  appraisers  shall  be  paid  by  the  corpo- 
ration. When  the  corporation  shall  have  paid  the  appraised  value  of 
such  stock,  as  directed  by  the  court,  said  stock  shall  be  cancelled 
and  such  stockholder  shall  cease  to  be  a  member  of  said  corporation 
or  to  have  any  interest  in  such  stock  and  in  the  corporate  property, 
and  such  stock  may  be  held  and  disposed  of  by  the  corporation  for 
its  own  benefit.  Upon  the  merger  of  any  corporation  in  the  man- 
ner herein  provided,  all  and  singular  the  rights,  franchises  and 
interests  of  the  said  corporation  so  merged  in  and  to  every  species 
of  property,  real,  personal  and  mixed,  and  things  in  action  there- 
unto belonging,  shall  be  deemed  and  transferred  to  and  vested  in 
Buch  corporation  into  which  it  has  been  merged,  without  any  other 
deed  or  transfer;  and  the  said  last  named  corporation  shall  hold 
and  enjoy  the  same  and  all  rights  of  property,  franchises  and  in- 
terests in  the  same  maimer  and  to  the  same  extent  as  if  the  said  cor- 
poration so  merged  had  retained  the  title  and  continued  to 
transact  the  business  of  such  corporation;  and  the  corporation 
into  which  merger  has  been  made  shall  acquire,  possess  and  retain 
all  rights  and  privileges  belonging  to  either  of  said  corporations  at 
the  time  of  such  merger  provided  that  if  one  of  the  parties 
to  such  agreement  be  a  corporation  organized  under  article 
seven  of  the  banking  law,  or  under  the  laws  of  this  state 
for  the  purposes  or  either  of  them  memtioned  in  article  seven 
of  the  banking  law,  the  corporation  into  which  merger  has 
been  made  siliall  acquire,  possess  and  retain  only  such  rights 
and  privileges  to  do  business  belonging  to  either  of  said  cor- 
porations at  the  time  of  such  merger  as  imay  at  that  time  be 
possessed  by  the  corporation  into  which  they  are  merged,  and  shall 
be  subject  only  to  the  supervision  of  that  department  of  the  state 
government  which  theretofore  had  supervision  over  the  corpora- 
tion into  whicih  tliey  are  merged.  The  corporation  into  which 
the  others  shall  be  mergedi  may  increase/  its  capital  stock  on  coir 
pliance  with  tlie  provisions  of  law  in  that  regard  to  a  sum  not  en 


306  The  Insurance  Law.  §  179 

ceeding  the  limit  permitted  at  the  time  of  such  merger  to  either  of 
the  corporations  so  merged ;  and  the  title  and  real  estate  acquired 
by  such  corporation  so  merged  shall  not  be  deemed  to  revert  by 
means  of  such  merger  or  anything  relating  thereto.  The  rights  of 
creditors  of  any  corporation  that  shall  be  so  merged  shall  not  in  any 
manner  be  impaired  by  any  such  merger,  nor  shall  any  liability  or 
obligation  for  the  payment  of  any  money  due  or  to  become  due,  or 
any  claim,  guaranty  or  demand,  in  any  manner  or  for  any  cause 
existing  against  such  corporation,  or  against  any  stockholder 
thereof,  be  in  any  manner  released  or  impaired,  and  all  the  rights, 
obligations  and  relations  of  all  the  parties,  creditors,  depositors, 
trustees  and  beneficiaries  of  trusts,  shall  remain  unimpaired  by  the 
merger;-  but  such  corporation  into  which  the  others  shall 
be  merged  shall  succeed  to  such  relations,  obligations,  trusts  and 
liabilities  and  be  held  liable  to  pay  and  discharge  all  such  debts 
and  liabilities  and  perform  all  such  trusts  of  the  merged  corpo- 
ration in  the  same  manner  as  if  such  corporation  into  which 
the  other  shall  become  merged  had  itself  incurred  the  obliga- 
tion or  liability  or  assumed  the  relation  or  trust,  and  the  stock- 
holders of  the  respective  corporations  so  entering  into  such 
agreement,  shall  continue  subject  to  all  the  liabilities,  claims  and 
demands  existing  against  them  as  such  at  or  before  such  merger, 
and  no  suit,  action  or  other  proceeding  then  pending  before  any 
court  or  tribunal  in  which  any  corporation  that  may  be  merged  is 
a  party,  shall  be  deemed  to  have  abated  or  discontinued  by  reason 
of  any  merger,  but  the  same  may  be  prosecuted  to  final  judgment 
in  tlie  same  manner  as  if  the  said  corporation  had  not  entered  into 
the  said  agreement,  or  the  said  last  named  corporation  may  be  sub 
stituted  in  the  place  of  any  corporation  so  merged  as  aforesaid  by 
order  of  the  court  in  which  such  action,  suit  or  proceeding  may  be 
pending. 

Source.— Former  §  179,  as  added  by  L.  1901,  chap.  657. 

Amended  by  L.  1916,  chap.  345.     In  effect  April  27,  1916. 

Under  ihia  section,  a  merged  corporation  retains  all  the  rights  and 
privileges  belonging  to  the  constituent  company,  and  the  restrictions  of  section 
16  as  to  inves'tments  and  loans  do  not  apply.  Attorney-'General  Rep.,  July  5, 
1907. 


§§  ISO,  181.     Title  and  Credit  Guaranty  Corporations.     307 

§  180.  Additional  powers  of  certain  title  guaranty  com- 
panies. 

Each  title  guaranty  corporation  organized  under  the  general 
statutes  of  tliis  state,  and  having  its  principal  place  of  business 
within  a  county  containing  upwards  of  one  hundred  thousand  and 
less  than  two  hundred  and  fifty  thousand  inhabitants,  as  appears 
by  the  last  state  enumeration  of  its  inhabitants,  may,  within  the 
judicial  department  where  it  shall  have  its  principal  place  of 
business,  possess  and  exercise,  in  addition  to  the  powers  conferred 
upon  it  by  this  chapter,  the  power  to  act  as  agent  for  any  individual 
in  the  care  and  management  of  real  or  personal  property;  the 
power  to  guarantee  the  fidelity  of  persons  holding  places  of  public 
or  private  trust;  the  power  to  guarantee  the  performance  of  con- 
tracts other  than  insurance  policies,  and  the  power  to  execute  or 
guarantee  bonds  and  undertakings  required  or  permitted  in  all 
actions  or  proceedings  or  by  law  allowed. 

Source.— L.  1896,  chap.  38,  §  1. 

A  guaranty  company  not  witliin  a  county  containing  upwards  of  one 
hundred  thousand  and  less  than  two  hundred  and  fifty  thousand  inhabitants, 
has  no  power  to  guarantee  that  a  building  shall  be  completed  within  a  cer- 
tain time  and  according  to  certain  plans.  Attorney-General  Rep.,  Feb.  28, 
1912. 

§  181.    May  execute  bonds  and  undertakings. 

Whenever  a  bond,  undertaking,  recognizance,  guaranty  or  other 
obligation  is  required,  permitted,  authorized  or  allowed ;  or  when- 
ever the  performance  of  any  act,  duty  or  obligation,  or  the  re- 
fraining from  any  act,  is  required,  permitted,  authorized  or  al- 
lowed to  be  secured  or  guaranteed,  such  bond,  undertaking, 
recognizance  or  other  obligation,  or  such  security  or  guaranty, 
may  be  executed  by  a  corporation  authorized  by  the  laws  of  this 
state  and  by  its  charter  to  execute  such  instrument;  and  such 
corporations  are  authorized  and  empowered  to  execute  all  such 
instruments;  and  the  execution  by  any  such  corporation  of  such 
bond,  undertaking,  recognizance,  guaranty  or  other  obligation  by 
an  officer,  attorney  in  fact  or  other  authorized  representative 
shall  be  sufficient  and  be  accepted  as  and  be  a  full  compliance 


308  The  Insurance  Law.  §  182. 

with  every  law  or  other  requirement  now  in  force  or  that  may 
hereafter  be  enacted  or  made  that  such  bond,  undertaking,  recog- 
nizance, guaranty  or  like  obligation  be  required  or  permitted  or  be 
executed  by  a  surety  or  sureties,  or  that  such  surety  or  sureties  be 
residents,  householders  or  freeholders,  or  possess  any  other 
qualifications. 

Source.— L.  1893,  chap.  720,  §  1,  as  amended  by  L.  1895,  chap.  178,  §  1. 

Amended  by  L.  1913,  chap.  182.    In  effect  July  1,  1913. 

Note. — The  purpose  of  the  amendment  of  sections  181,  182  and  183  by  chap- 
ter 182  of  1913  was  to  correct  an  obvious  defect  in  the  former  law,  to  simplity 
procedure  and  work  for  economy  by  providing  that  the  court  in  passing  upon 
the  sufficiency  of  a  surety  bond  or  undertaking  shall  accept  the  certificate  of 
the  superintendent  as  to  the  solvency  of  the  surety. — Ed. 

§  182.  Issuance  of  certificate  of  solvency  by  superintendent 
of  insurance. 

The  superintendent  of  insurance  shall  on  application  issue  to 
any  such  corporation  his  certificate  that  it  is  qualified  to  become 
and  be  accepted,  subject  to  the  limitations  specified  in  section 
twenty-four  of  this  chapter,  as  surety  or  guarantor  on  all  bonds, 
undertakings,  other  obligations  or  guaranties  specified  in  section 
one  hundred  and  eighty-one  of  this  chapter  or  under  any  other 
law  or  requirement  which  certificate  or  a  copy  thereof  certified  to 
be  such  by  the  superintendent,  shall  be  conclusive  evidence  of  the 
solvency  of  such  corporation  and  of  its  sufficiency  as  such  surety 
or  guarantor,  and  of  the  propriety  of  accepting  and  approving  it  as 
such,  and  be  in  lieu  of  any  justification  required  of  such  corpora- 
tion by  any  law  or  requirement.  The  superintendent  may  at  any 
time  after  the  issuance  of  a  certificate  of  solvency,  upon  notice  to 
and  hearing  of  such  corporation,  revoke  such  certificate  by  filing  a 
revocation  thereof  in  his  office  and  serving  a  copy  on  the  corpora- 
tion to  which  such  certificate  was  issued.  The  superintendent 
may  publish  notice  of  such  revocation  in  such  newspapers  as  he 
deems  proper. 

Source.— L.  1893,  chap.  720,  §  2. 

Amended  by  L.  1913,  chap.  182.    In  effect  July  1,  1913. 

Note. — The  purpose  of  the  amendment  of  sections  181,  182  and  183  by  chap- 
ter 182  of  1913  was  to  correct  an  obvious  defect  in  the  former  law,  to  simplify 


§  183.       Title  and  Okedit  Guaranty   Cokporations.       309 

procedure  and  work  for  economy  by  providing  that  the  court  in  passing  upon 
the  sufficiency  of  a  surety  bond  or  undertaking  shall  accept  the  certificate  of 
the  superintendent  as  to  the  solvency  of  the  surety. — ^Ed. 

§  183.    Supreme  court  may  require  statement  to  be  filed. 

If  a  certificate  of  solvency  shall  not  have  been  issued  by  the 
superintendent  of  insurance  to  any  such  corporation,  or  if  such 
certificate  shall  have  been  revoked,  the  supreme  court  in  the  ju- 
dicial department  which  includes  the  county  in  which  the  princi- 
pal place  of  business  in  this  state  of  any  such  corporation  shall 
be  located,  may,  at  any  time,  and  as  frequently  as  said  court  shall 
deem  requisite,  require  such  corporation  to  file  with  the  clerk 
of  said  county  a  sworn  statement  of  its  condition,  and  may  also 
require  such  corporation,  through  one  or  more  of  its  officers,  to 
submit  to  an  examination  as  to  its  solvency.  Such  statement  and 
examination,  when  filed  with  said  clerk,  or  a  certified  copy  thereof 
filed  with  the  clerk  of  any  other  county,  may  be  received  and 
considered  as  justification  upon  any  and  all  bonds,  undertakings 
or  other  instruments  executed  or  guaranteed  by  such  corporations, 
which  shall  thereafter  be  presented  for  approval. 

Source.— L.  1893,  chap.  720,  §  4,  as  amended  by  L.  1895,  chap.  178,  §  2.  For- 
mer §  183,  of  L.  1893,  ohap.  720,  §  3,  repealed  by  L.  1913,  chap.  182. 

Amended  by  L.  1913,  chap.  182  and  number  changed  from  184  to  183.  In 
effect  July  1,  1913. 

Note. — The  purpose  of  the  amendment  of  sections  181,  182  and  183  by  chap- 
ter 182  of  1913  was  to  correct  an  obvious  defect  in  the  former  law,  to  simplify 
procedure  and  work  for  economy  by  providing  that  the  courts  in  passing  upon 
tbe  sufficiency  of  a  surety  bond  or  undertaking  shall  accept  the  certificate  of 
the  superintendent  as  to  the  solvency  of  the  surety. — Ed. 

RISKS. —  A  surety  company  is  not  exempt  from  section  24  of  the  Insurance 
Law,  limiting  the  amount  of  any  one  risk;  the  section  was  not  rendered  inap- 
plicable by  chapter  720  of  1893,  as  amended  by  chapter  178  of  1895  j  the  value 
of  collaterals  taken  by  the  company  are  to  be  deducted  from  the  amount.  Ind. 
and  Gen.  Trust  Co.  v.  Tod,  56  App.  Div.,  39, 


310  The  Insurance  Law.  §  185. 

AKTICLE  5-A. 

Mutual  Employees'  Liability  and  Workmen's  Compensation 

Corporations. 
Section  185.  Incorporation. 

186.  Completion  of  organization. 

187.  Directors  and  officers. 

188.  Meetings. 

189.  Assessments. 

190.  Dividends. 

191.  Reserves;      suspension;      cancellation     and      reinstatement      of 

certificate. 

192.  Reports  to  and  examinations  by  superintendent. 

193.  Prevention  of  accidents. 

194.  Authorization  of  foreign  mutual  insurance  corporations. 

§  185.    Incorporation, 

Thirteen  or  more  persons  may  become  a  corporation  for  the 
purpose  of  insuring  on  the  mutual  plan  against  loss  or  damage 
resulting  from  accident  to  or  injury  suffered  by  an  employee 
or  other  person  and  for  which  the  person  insured  is  liable,  or 
the  liability  of  the  employer  to  pay  compensation  to  his  em- 
ployees, or  the  compensation  of  employees  under  any  workmen's 
compensation  law,  or  against  loss  or  damage  caused  by  a  truck, 
wagon  or  other  vehicle  propelled  by  steam,  gas,  gasoline,  electric, 
mechanical  or  other  power  or  drawn  by  horses  or  mules,  used  in 
trade  or  manufacture  and  owned  by  any  such  person  to  the  prop- 
erty of  another  for  which  loss  or  damage  the  person  insured  is 
liable,  by  making  and  filing  in  the  ofiice  of  the  superin- 
tendent of  insurance  a  certificate  to  be  signed  by  each  of  them, 
stating  their  intention  to  form  a  corporation  for  the  pur- 
pose named,  and  setting  forth  a  copy  of  the  charter  which  they 
propose  to  adopt,  which  shall  state  the  name  of  the  proposed 
corporation,  the  place  where  it  is  to  be  located,  the  mode  and 
manner  in  which  its  corporate  powers  are  to  be  exercised,  the 
number  of  directors,  the  manner  of  electing  its  directors  and 
officers,  the  time  of  such  elections,  the  manner  of  filling  vacancies, 
the  names  and  post  office  addresses  of  the  directors  who  will  serve 
until  the  first  annual  meeting  of  such  corporation,  and  such  fur- 
ther particulars  as  may  be  necessary  to  explain  and  make  manifest 
the  objects  and  purposes  of  the  corporation.    Such  certificate  shall 


§  18G.      Mutual  Employees'  Liability  CoRroRATioNS.        Sll 

be  proved  or  acknowledged  and  recorded  in  a  book  kept  for  that 
purpose  by  the  superintendent  of  insurance  and  a  certified  copy 
thereof  shall  be  delivered  to  the  persons  executing  the  same. 
Added  by  L.  1913,  chap.  832.     In  effect  December  23,  1913. 

§  186.    Completion  of  organization. 

Upon  receipt  of  a  certified  copy  of  the  certificate  of  incorpora- 
tion from  the  superintendent  of  insurance,  the  persons  signing 
such  certificate  may  open  books  to  receive  applications  for  mem- 
bership therein.  "No  such  corporation  shall  transact  any  business 
of  insoirance  unless  the  annual  premium  cost  on  the  insurance 
applied  for  shall  be  not  less  than  twenty-five  thousand  dollars  at 
the  minimum  annual  rates  approved  by  the  superintendent  of  in- 
surance and  until  at  least  forty  employers  employing  not  less  than 
twenty-five  hundred  employees;  or  thirty  employers  employing 
not  less  than  five  thousand  employees;  or  twenty  employers  em- 
ploying not  loss  than  seven  thousand  ^ve  hundred  employees; 
or  ten  employers  employing  not  less  than  ten  thousand  employees, 
have  become  members  of  such  corporation  and  applied  for  and 
agreed  to  take  insurance  therein,  covering  the  liability  of  such  em- 
ployers to  their  employees  for  accidents  to  or  injuries  suffered  by 
such  employee  nor  until  the  facts  specified  in  this  section  have  been 
certified  under  oath  by  at  least  three  of  the  persons  signing  the 
original  certificate,  to  the  superintendent  of  insurance,  and  the 
superintendent  of  insurance  has  issued  a  license  to  such  corpo- 
ration authorizing  such  corporation  to  begin  writing  the  insurance 
specified  in  this  article.  The  superintendent  of  insurance  must 
be  satisfied  that  the  membership  list  of  the  corporation  is  genuine, 
and  that  every  member  thereof  will  take  the  policies  as  agreed  by 
him  within  thirty  days  of  the  granting  of  the  license  to  the  cor- 
poration by  the  superintendent  of  insurance  to  issue  policies.  If 
at  any  time  the  number  of  members  or  the  number  of  employees 
who  are  employed  by  the  members  of  the  corporation  falls  below 
the  number  required  by  this  section,  no  further  policies  shall 
be  issued  by  the  corporation  until  other  employers  have  made 
bona  fide  applications  for  insurance  therein,  who,  together  with 
the  existing  members,  amount  to  not  less  than  forty  employers 
who  employ  not  less  than  twenty-five  hundred  employees,  or 
thirty    employers    who    employ    not    less    than    five    thousand 


312  The  Ixsukance  Law.  §§   1S7,  188. 

employees,  or  twenty  employers  who  employ  not  less  than 
seven  thousand  five  hundred  employees,  or  ten  employers 
who  employ  not  less  than  ten  thousand  employees,  and  in 
the  event  that  such  applications  for  insurance  shall  not  be  ob- 
tained within  a  reasonable  time,  to  be  fixed  by  the  superintend- 
ent of  insurance,  such  superintendent  may  take  the  proceedings 
against  such  corporation  under  section  sixty-three  of  this  chapter 
to  the  same  effect  as  if  clause  h  of  subdivision  one  of  such  section 
was  specifically  applicable  to  corporations  organized  under  this 
article. 

The  members  of  the  corporation  shall  be  policyholders  therein, 
and  when  any  member  ceases  to  be  a  policyholder  he  shall  cease, 
at  the  same  time,  to  be  a  member  of  the  corporation.  A  corpora- 
tion, partnership,  association  or  joint-stock  company  may  become 
a  member  of  such  insurance  corporation  and  may  authorize  an- 
other person  to  represent  it  in  such  insurance  corporation,  and 
such  representative  shall  have  all  the  rights  of  any  individual 
member.  Any  person  acting  as  employer  in  the  capacity  of  a 
trustee  may  insure  in  such  corporation  and  as  such  trustee  may 
assume  the  liabilities  and  be  entitled  to  the  rights  of  a  member, 
but  shall  not  be  personally  liable  upon  such  contract  of  insurance. 

Such  corporation  may  borrow  money  or  assume  liability  in  a 
sum  sufficient  to  defray  the  reasonable  expenses  of  its  organization. 

Added  by  L.  1913,  chap.  832.     In  effect  December  23,  1913. 
Amended  by  L.  1915,  chap.  506.    In  effect  May  3,  1915. 

§  187.    Directors  and  officers. 

Any  such  corporation  shall  have  not  less  than  thirteen  directors, 
and  such  officers  as  shall  be  provided  in  the  certificate  of  incorpo- 
ration or  by  the  by-laws  made  by  the  members.  The  directors 
shall  be  elected  annually  by  the  votes  of  the  members.  All  ex- 
cept two  of  the  directors  of  the  corporation  elected  after  the  or- 
ganization of  the  corporation  is  completed  and  it  is  authorized  to 
begin  to  issue  insurance  policies  shall  be  members  of  the  corpora- 
tion. All  the  officers  except  the  secretary,  assistant  secretary  and 
the  actuary  must  be  members  of  the  board  of  directors. 
Added  by  L.  1913,  chap.  832.    In  effect  December  23,  1913. 

§  188.    Meetings;  basis  of  right  to  vote. 

At  all  meetings  of  the  members  of  the  corporation  each  member 
shall  have  one  vote  and  one  additional  vote  for  every  five  hundred 


§  189.       Mutual  Employees'  Liability  CoEroRATioNS.        318 

employees  or  major  fraction  thereof,  covered  by  the  policy  held 
by  such  member  in  the  corporation,  provided  that  no  member 
shall  have  more  than  twentv  votes.  The  number  of  votes  of  a 
member  shall  be  determined  by  the  average  number  of  employees 
at  work  and  covered  by  said  member's  policy  in  the  corporation 
during  the  last  six  months  from  a  date  not  more  than  ten  days 
immediately  prior  to  the  date  of  any  such  meeting.  Before  any 
member  shall  be  permitted  to  cast  more  than  one  vote  at  any 
meeting  of  members  he  shall  file  with  the  secretary  an  afiidavit 
showing  the  average  number  of  employees  at  work  during  the  pre- 
ceding six  months  covered  by  the  employer's  policy  of  insurance. 

Added  by  L.  1913,  chap.  832.    In  effect  December  23,  1913. 
Amended  by  L.  1915,  cliap.  506.    In  e£fect  May  3,  1915. 

§  189.    Assessments. 

The  corporation  may  in  its  by-laws  and  policies  fix  the  con- 
tingent mutual  liability  of  the  members  for  the  payment  of  losses 
and  expenses  not  provided  for  by  its  cash  funds;  but  such  con- 
tingent liability  of  a  member  shall  not  be  less  than  an  amount 
equal  to  and  in  addition  to  the  cash  premium  written  in  the 
policy.  If  the  corporation  is  not  possessed  of  cash  funds  above 
its  unearned  premium  sufficient  for  the  payment  of  incurred 
losses  and  expenses^  it  shall  make  an  assessment  for  the  amount 
needed  to  pay  such  losses  and  expenses  upon  the  members  liable 
to  assessment  therefor,  in  proportion  to  their  several  liability. 
Every  member  shall  be  liable  to  pay  and  shall  pay  his  propor- 
tionate part  of  any  assessment  which  may  be  laid  by  the  corpora- 
tion in  accordance  with  law  and  his  contract,  on  account  of  losses 
and  expenses  incurred  while  he  was  a  member,  if  he  is  notified 
of  such  assessment  within  one  year  after  the  expiration  of  his 
policy.  All  assessments  shall  be  based  upon  present  values  of  all 
future  payments,  and  all  proposed  premium  assessments  shall  be 
filed  in  the  insurance  department  and  shall  not  take  effect  until 
approved  by  the  superintendent  of  insurance,  after  such  investi- 
gation as  he  may  deem  necessary.  All  funds  of  the  corporation 
and  the  contingent  liability  of  the  members  thereof  shall  be  avail- 
able for  the  payment  of  any  claim  against  the  corporation. 

Added  by  L.  1913,  chap.  832.    In  effect  December  23,  1913. 


314         '  The  Insurance  Law.  §§  190,  191. 

§  190.    Dividends. 

The  board  of  directors  may,  from  time  to  time,  fix  and  deter- 
mine the  amount  to  be  paid  as  a  dividend  upon  policies  expiring 
during  each  year  after  retaining  sufficient  sums  to  pay  all  the 
compensation  and  other  policy  obligations  which  may  be  payable 
on  account  of  the  injuries  sustained  and  expenses  incurred.  Such 
dividend  shall  not  take  effect  or  be  distributed  until  approved  by 
the  superintendent  of  insurance  after  such  investigation  as  he  may 
deem  necessary.  Any  such  corporation  may  hold  cash  assets  in 
excess  of  its  liabilities,  but  such  excess  shall  be  limited  to  one  hun- 
dred per  centum  of  its  reserves  for  losses  and  expenses  incurred, 
and  may  be  used  from  time  to  time  in  payment  of  losses,  dividends 
and  expenses. 

Added  by  L.  1&13,  chap.  832.    In  effect  December  23,  1913. 

Amended  by  L.  1916,  chap.  393.     In  effect  May  2,  1916. 

Note. —  By  the  amendment  of  1916,  dividends  of  mutual  companies  must  be 
approved  by   the  superintendent. —  Ed. 

§  191.  Reserves;  suspension;  cancellation  and  reinstate- 
ment of  certificate. 

Such  corporation  shall  be  required  to  maintain  the  same  re- 
serves for  the  protection  of  policyholders  and  employees  who  may 
have  a  right  of  action  directly  against  such  corporation  as  are 
required  to  be  maintained  by  stock  insurance  corporations  in 
relation  to  the  same  class  of  insurance,  except  that  reserves  for 
liability  for  insurance  of  compensation  under  the  workmen's  com- 
pensation law  shall  be  prescribed  by  the  superintendent  of 
insurance,  and  the  superintendent  of  insurance  may  suspend 
or  cancel  the  certificate  issued  by  him  authorizing  said  cor- 
poration to  transact  such  insurance  business  at  any  time  when 
in  the  judgment  of  the  superintendent  of  insurance  the  reserves 
of  said  corporation  are  insufficient  to  insure  and  secure  the  pay- 
ment of  its  policy  obligations,  and  the  superintendent  of  insur- 
ance may  reinstate  or  renew  said  certificate  whenever  by  assess- 
ment or  otherwise  said  reserves  have  been  increased  to  a  sum  suffi- 
cient in  the  judgment  of  the  superintendent  of  insurance  to  insure 
and  secure  the  payment  of  the  policy  obligations  of  such  cor- 
poration. 

Added  by  L.  1913,  chap.  832.    In  effect  December  23,  1913. 

Amended  by  L.  1915,  chap.  506.    In  effect  May  3,  1915. 


§§  192-194.  Mutual  Employees'  Liability  Corporations.    315 

§  192.  Reports  to  and  examinations  by  superintendent  of 
insurance. 

Every  such  corporation  shall  make  reports  to  the  superintendent 
of  insurance  at  the  same  times  and  in  the  same  manner  as  are 
required  from  stock  insurance  companies  transacting  the  same 
kind  of  business,  and  the  superintendent  of  insurance  may  ex- 
amine into  the  aifairs  of  such  corporation  at  any  time,  either 
personally  or  by  any  duly  authorized  examiner  appointed  by  him, 
and  the  superintendent  of  insurance  must  make  such  an  examina- 
tion into  the  affairs  of  said  corporation  at  least  once  in  every  two 
years. 

Added  by  L.  1913,  chap.  832.    In  effect  December  23,  1913. 

§  193.    Prevention  of  accidents. 

The  board  of  directors  shall  make  and  enforce  reasonable  rules 
and  regulations  not  in  conflict  with  the  laws  of  the  state  for  the 
prevention  of  accidents  to  the  employees  on  the  premises  of  mem- 
bers, and  for  this  purpose  the  inspectors  of  the  corporation  shall 
have  free  access  to  all  such  premises  during  regular  working 
hours.  The  policy  of  any  member  neglecting  to  provide  suitable 
safety  appliances  as  provided  by  law  or  as  required  by  the  board 
of  directors  may  be  canceled  and  terminated  by  the  board  of 
directors  after  giving  to  such  member  notice  of  cancellation  ten 
days  prior  to  its  becoming  effective. 
Added  by  L.  1913,  chap.  832.     In  effect  December  23,  1913. 

§  194.  Authorization  of  foreign  mutual  insurance  corpora- 
tions. 

After  January  first,  nineteen  hundred  and  seventeen,  the  super- 
intendent of  insurance  may,  in  his  discretion,  issue  a  certificate  of 
authority  to  a  mutual  corporation  organized  under  the  laws  of 
another  state  to  do  such  insurance  in  this  state ;  provided  that,  in 
no  event,  shall  authority  be  given  to  any  such  mutual  corporation 
to  do  other  kinds  of  business  than  those  specified  in  this  article. 
Such  corporation  shall  be  required  to  maintain  the  same  reserves 
for  the  protection  of  members  and  employees  as  are  required  for 
domestic  cor2X)rations  authorized  to  transact  the  same  kinds  of 
insurance,  and  shall  at  all  times  have  and  maintain  a  surplus  over 


316  The  Insitrance  Law.  §  194. 

and  above  all  liabilities,  including  iinoamed  premiums  and  loss 
re&eTveSy  of  not  less  than  one  hundred  tliousand  dollars.  If  any 
such  corporation  shall  not  at  all  times  have  and  maintain  the  sur- 
plus and  reserves  hereby  required,  the  superinrtendent  of  insurance 
may,  at  any  time,  in  his  dis-oretion^  revoke  its  certificate  of  author- 
ity to  do  business  in  this  state. 

Added  by  L.  1913,  chap.  832.     In  effect  December  23,  1913. 
Amended  by  L.  1916,  chap.  393.     In  effect  May  2,  1916. 

N'ote. —  The   amendment   of    1916    requires   companies   of   this   character    of 
other  states  to  have  and  maintain  a  surplus  of  at  least  $100,000. —  Ed. 


§  200.       Life  oe  Casualty  Insurance  Corporations.        317 

AETICLE  Vl. 

Life  or  Casualty  Insurance  Corporations  upon  the  Co-op- 
erative OR  Assessment  "Plan. 

Section    200.  Incorporation. 

201.  What  corporations  to  be  subject  to  this  article. 

202.  Annual  report. 

203.  Designation  of  principal  office,  and  of  persona  ur^m  whom  pro- 

cess may  be  served. 

204.  Foreign  corporations. 
204-a.  Reciprocal  certificate. 

205.  Reserve  or  emergency  fund. 

206.  Reincorporation  of  existing  societio>* 

207.  Visitation  by  superintendent;   proceedings  to  restrain  corpora- 

tion from  doing  business. 

208.  Hearing  thereon. 

209.  Corporations  subject  to  this  article;  annual  meetings;  examina- 

tions; transfers  of  risk;  reinsurance. 

210.  Payment    of    maximum    amount     of    policy;     agreements    for 

benefits;  notice  of  assessment. 

211.  Change  of  beneficiary. 

212.  Exemption  from  execution. 

213.  Penalties. 

214.  Exemption  of  certain  societies  and  of  subordinate  lodges,  of  Odd 

Fellows  and  Masons,  from  the  provisions  of  this  article. 

215.  Corporations  may  deposit  securities .  with  tJ)e  superintendent  of 

insurance. 

216.  Quorum. 

217.  Reincorporation 

218.  Admission  •>    minors. 

219.  Policy  to  indicate  assessment  plan. 

220.  Forms  of  policies  or  certificates  must  be  filed  and  approved. 

Section  200.    Incorporation. 

TvTine  or  more  persons  may  become  a  corporation  for  the  purpose 
nf  transacting  the  business  of  life  or  casualty  insurance,  or  both, 
upon  the  co-operative  or  assessment  plan,  fraternal  or  non -frater- 
nal, by  filing  in  the  office  of  the  superintendent  of  insurance  a  dec- 
laration signed  by  each  of  tiiem  and  duly  acknowledged,  setting 
forth  their  intention  to  form  a  corporation  for  the  transaction  of 
life  or  casualty  insurance,  or  both,  upon  the  co-operative  or  assess- 
ment plan,  the  name  of  the  proposed  corporation,  the  place  where 
its  principnl  office  shall  be  located  within  the  state,  the  mode  in 
which  its  corporate  powers  are  to  be  exercised  and  of  electing 
directors  or  other  persons,  by  whatsoever  name  or  title  designated. 


318  The  Insurance  Law.  §  200. 

who  are  to  have  aud  exercise  the  general  control  and  management 
of  its  affairs  and  of  its  funds,  which  election  shall  be  in  such  manner 
as  shall  be  prescribed  bj  its  by-laws,  or  in  case  of  fraternal  socie- 
ties, by  representatives  chosen  by  subordinate  lodges,  councils  or 
bodies,  who  shall  be  members  of  such  societies  and  a  majority  of 
them  citizens  of  this  state.  Such  declaration  shall  have  endorsed 
thereon  or  annexed  thereto  and  as  a  part  thereof,  the  sworn  state- 
ment of  tliree  of  such  persons  that  at  least  two  hundred  persona 
eligible  under  the  proposed  laws  of  the  corporation  to  membership 
therein  have  in  good  faith  made  applications  in  writing  for 
membership. 

If  all  the  requirements  of  tliis  chapter  have  been  complied  with, 
the  superintendent  shall  file  such  declaration  and  record  it  with  tiie 
certificate  of  the  attorney-general,  in  a  book  to  be  kept  for  that  pur- 
pose, and  deliver  to  the  corporation  a  certified  copy  of  the  papers  so 
filed  and  recorded,  with  his  license  in  writing  to  the  corporation  t<. 
engage  in  the  business  proposed  in  tlie  declaration,  which  certified 
copy  and  license  shall  be  filed  in  the  office  of  the  clerk  of  the  county 
where  the  office  of  the  corporation  is  to  be  located.  Such  corpora- 
tion shall  not  commence  the  business  of  insurance  until  at  least 
two  hundred  persons  have  subscribed  in  writing  to  be  insured 
therein  in  the  aggregate  amount  of  at  least  four  hundred  thousand 
dollars,  and  have  each  paid  in  two  per  centum  on  the  amount  of  the 
insurance  severally  subscribed  for  in  cash,  and  the  same  is  deposited 
in  bank  to  the  credit  of  the  mortuary  fund  to  be  held  in  trust  for 
the  benefit  of  the  beneficiaries,  and  the  superintendent  of  insurance 
shall  have  further  certified  that  it  has  complied  with  the  provisions 
of  this  chapter,  and  is  authorized  to  transact  biisiiioss. 

Provided,  however,  that  no  such  corporation  other  than  a  frater 
nal  corporation  shall  be  formed  nor  any  such  license  or  certificate 
be  granted  or  issued  by  the  superintendent  of  insurance  after  June 
first,  nineteen  hundred  and  six. 

Source.— Former  §  200,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1883,  chap.  175,  §§  1,  2,  and  §  3,  as  amended  by  L.  1887,  ohap.  285. 

8ee  §  6.    Fees  to  superintendent  for  filing  declaration. 

See  S  9.    Certificate  of  authorization  of  superintendent. 

See  S  10,  ante.  Certificate  of  attorney -general;  corporate  names;  number 
of  directors. 

See  S  60,  General  Corporation  Law.  Proceedings  to  change  name  of  cor- 
poration. 


§  201.   Life  or  Casualty  Insurance  Corporations.   319 

See  §  1197,  Penal  Law.  Failure  of  officer  to  designate  persons  upon  whom 
process  may  be  made,  a  misdemeanor. 

INFANTS. —  A  corporation  organized  under  this  section  has  no  power  to 
receive,  as  members,  infants  of  such  tender  years  that  they  are  unable  to 
exercise  any  choice  in  becoming  members,  or  to  exercise  the  powers  with 
which  members  are  invested  under  the  act.  Matter  of  G.  M.  B.  Assn.,  135 
N.  Y.,  280. 

Co-operative  insurance  companies  cannot  insure  the  lives  of  infants.  Attor- 
ney-General Rep.,  1892,  page  366. 

CONTRACT. —  The  contract  between  a  member  of  a  corporation  organized 
under  this  section  and  the  corporation  is  contained  in  its  constitution  and 
by-laws,  and  they  should  be  considered  together,  the  corporation  has  the 
right  to  change  the  amount  allowed  to  sick  members,  even  after  a.  member 
has  become  sick.    Poultney  v.  Bachman,  31  Him,  52. 

Companies  organized  as  co-operative  insurance  companies  have  no  authority 
to  contract  with  merchants,  newspapers  or  periodicals  for  the  delivery  of 
coupons  to  purchasers  entitling  the  holder,  under  certain  conditions,  to  an 
indemnity  insurance.     Attorney -General  Rep.,  1893,  page  200. 

A  quorum  of  directors  must  be  a  majority  of  all  the  directors,  unless 
otherwise  provided  in  charter  or  special  law.  By-laws  cannot  change  this 
rule.    Attorney-General  Rep.,  1900,  page  253. 

By-laws  are  not  a  part  of  the  policies  issued  unless  expressly  referred  to 
and  incorporated  therein.    Kingsley  v.  N.  E.  Mut.  Life  Ins.  Co.,  8  Gushing,  393. 

An  insurance  company  and  a  savings  and  loan  company  cannot  issue  a 
joint  certificate  to  a  proposed  policyholder,  Attorney-General  Rep.,  1893, 
page  259. 

Discrimination  between  members  of  a  co-operative  insurance  company  is 
not  permissible.    Attorney-General  Rep.,  1892,  page  303. 

§  201.    What  corporations  to  be  subject  to  this  article. 

Any  corporation,  association  or  society  which  issues  any 
certificate,  policy  or  other  evidence  of  interest  to,  or 
makes  any  promise  or  agreement  with  its  members, 
whereby,  upon  the  decease  of  a  member  any  money 
or  other  benefit,  charity,  relief  or  aid  it  to  be  paid, 
provided  or  rendered  by  such  corporation,  association  or  society  to 
his  legal  representatives,  or  to  the  beneficiary  designated  by  him, 
which  money,  benefit,  charity,  relief  or  aid  is  derived  from  volun- 
tary donations  or  from  admission  fees,  dues  or  assessments,  or  any 
of  them,  collected  or  to  be  collected  from  the  members  thereof,  or 
members  of  a  class  therein,  or  interest,  or  accretions  thereon,  or  ac- 
cumulations thereof,  or  rebates  from  amounts  payable  to  benefi- 
ciaries or  heirs;  and  wherein  the  money  or  other  benefit,  charity, 
relief  or  aid,  so  realized,  is  applied  to  or  accumulated  for  the  uses 
and  purposes  herein  specified,  or  of  such  corporation,  association  or 


320  The  Insurance  Law.  §  201. 

society,  and  the  expenses  of  the  management  and  prosecution  of  its 
business,  shall  be  deemed  to  be  engaged  in  the  business  of  life  in- 
surance upon  the  co-operative  or  assessment  plan,  and  shall  be  sub- 
ject to  the  provisions  of  this  article. 

Any  such  corporation,  association  or  society,  which  issues  any 
certificate,  policy  or  other  evidence  of  interest  to,  or  makes  any 
promise  or  agreement  with,  its  members,  whereby,  upon  the  sick- 
ness or  other  physical  disability  of  a  member,  and  not  by  reason  of 
having  attained  a  certain  age,  any  money  or  other  benefit,  charity, 
relief  or  aid  is  to  be  paid,  provided  or  rendered  by  such  corporation, 
association  or  society  to  such  member  or  beneficiary  designated  by 
him,  which  money,  benefit,  charity,  relief  or  aid  is  derived  from 
voluntary  donations  or  assessments  or  admission  fees,  dues  or  as- 
sessments, or  any  of  them,  collected  or  to  be  collected  from  the  mem- 
bers thereof,  or  members  of  a  class  therein,  and  interest  and  accre- 
tions thereon ;  and  wherein  the  money  or  other  benefit,  charity,  re- 
lief or  aid  is  applied  to  or  accumulated  for  the  uses  and  purposes 
herein  specified  or  of  such  corporation,  association  or  society,  and 
the  expenses  of  the  management  and  prosecution  of  its  business, 
shall  be  deemed  to  be  engaged  in  the  business  of  casualty  insurance 
upon  the  co-operative  or  assessment  plan  and  shall  be  subject  to  the 
provisions  of  this  article.  .Notwithstanding  anything  to  the  con- 
trary contained  in  the  charter  or  certificate  of  incorporation  of 
any  corporation,  association  or  society  subject  to  the  provisions 
of  this  section,  such  corporation,  association  or  society  may,  by 
its  by-laws,  determine  and  designate  the  class  or  classes  of  persons 
who  may  be  named  and  designated  by  a  member  as  beneficiary 
in  any  certificate  of  membership  to  be  issued  to  him  and  to  whom 
the  moneys  payable  under  such  certificate  upon  the  death  of  such 
member  shall  be  payable.  Any  corporation,  association  or  society 
subject  to  the  provisions  of  this  section,  notwithstanding  anything 
in  its  charter  or  certificate  of  incorporation  to  the  contrary,  may, 
by  its  by-laws  in  force  at  the  time  of  the  death  of  a  member, 
designate  and  determine  the  class  or  classes  of  persons  to  whom, 
and  in  what  order,  shall  be  paid,  any  moneys  payable  under  any 
certificate  of  membership  issued  by  said  corporation,  association 
or  society,  upon  the  death  of  a  member  in  good  standing,  in 
default  of  a  designation  made  by  such  member  and  in  force  at 


§  202.       Life  ok  Casualty  Insurance  Corporations.        321 

the  time  of  his  death.  A  member  of  such  corporation,  associa- 
tion or  society  may  designate  or  name  as  his  beneficiary  or 
beneficiaries  any  one  or  more  of  the  persons  within  such  desig- 
nated class.  iN^othing  herein  contained  shall  be  construed  to  limit 
the  right  of  such  member  to  change  the  designation  of  an} 
beneficiary  named  by  him  as  at  present  provided  by  law. 

Source. — Former  §  201,  as  amended  by  L.  1907,  chap.  273;  originally  revised 
from  L.  1883,  chap.  175,  §§  5,  6. 

BURIALS. —  Corporations  issuing  contracts  to  furnish  burials  for  contract 
holders  upon  payment  of  stipulated  sum  at  execution  of  contract,  and  a  like 
sum  upon  death  of  the  contract  holder,  are  "  transacting  the  business  of 
insurance."     In  re  Barrett  Company,  Attorney-General  Rep.,  1903,  page  258. 

By  sections  201  and  209  co-operative  life  and  casualty  companies  are  made 
subject  to  the  provisions  of  Article  6,  herein.  Opinion  of  Attorney -General, 
August  29,  1907. 

Where  a  company  was  incorporated  under  the  provisions  of  chap.  175  of 
1883  for  the  transaction  of  life  insurance  only,  it  cannot  transact  the  busi- 
ne^'S  of  casualty  or  sick  benefit  insurance.  Attorney-General  Rep.,  Nov.  22, 
1904. 

§  202.    Annua!  report. 

Every  sucli  corporation,  association  or  society  doing  a  life  or 
casualty  insurance  business,  or  botli,  upon  the  co-operative  or  as- 
sessment plan,  as  herein  defined,  shall,  on  or  before  the  first  day 
of  March  in  each  year,  make  and  file  with  the  superintendent  of 
insurance  a  report  of  its  affairs  and  its  operations  during  the  year 
ending  on  the  thirty-first  day  of  December  immediately  preceding, 
which  report  shall  be  in  lieu  of  all  other  reports  required  by  this 
chapter.  Such  reports  shall  be  verified  by  such  of  the  officers  of  the 
corporation,  association  or  society  a3  the  superintendent  may 
require  and  shall  contain  answers  to  the  following  questions: 

1.  Number  of  certificates  or  policies  issued  during  the  year  or 
members  admitted. 

2.  iVmount  of  indemnity  effected  thereby. 

3.  Number  of  death  losses. 

4.  Number  of  death  losses  paid. 

5.  The  amount  received  from  each  assessment  in  each  class  for 
the  year. 

6.  Total  amount  paid  policy-holders,  beneficiaries,  legal  repre- 
sentatives or  heirs. 


322  The  Insurance  Law.  §  202. 

7.  E^umber  of  deatli  claims  for  which  assessments  have  been 
made. 

8.  ^N^umber  of  death  claims  compromised  or  resisted,  and  brief 
statement  of  reason. 

9.  Does  society  charge  annual  dues  ? 

10.  Plow  much  on  each  one  thousand  dollars  annually  or  per 
capita,  as  tlie  case  may  be  ? 

11.  Total  amount  received  and  the  disposition  thereof. 

12.  Does 'society  use  moneys  received  for  payment  of  death 
claims  to  pay  expenses  of  society,  in  whole  or  in  part,  and  if  so, 
state  the  amount  so  used  ? 

13.  State  total  amount  of  salaries  paid  to  officers. 

14.  Does  society  guarantee  fixed  amount  to  be  paid,  regardless 
of  amount  realized  from  assessments,  dues,  admission  fees  and 
donations  ? 

15.  If  so,  state  amount  guaranteed  and  the  security  of  such  guar- 
anty. 

16.  Has  the  society  a  reserve  fund? 

17.  If  so,  how  is  it  created,  and  for  what  purpose,  the  amount 
thereof  and  how  invested. 

18.  Has  the  society  more  than  one  class? 

19.  If  so,  how  many,  and  the  amount  of  mdenmity  in  eacn 

20.  Number  of  members  in  each  class. 

21.  If  organized  under  the  laws  of  this  state,  state  under  what 
law  and  at  what  time. 

22.  If  organized  under  the  laws  of  any  other  state,  state  such 
fact  and  the  date  of  organization. 

23.  Number  of  policies  of  membership  lapsed  during  tlie  year. 

24.  Number  in  force  at  beginning  and  end  of  year  in  each  class, 
if  more  than  one  class. 

25.  Aggregate  maximum,  minimuTii  and  average  age  of  member- 
ship in  each  class  in  the  society. 

26.  The  assets  applicablr  io  life  or  casualty  insurance  other  than 
pesen'e  fund,  and  how  invested. 

27.  Amount  received  from  all  sources  for  life  or  casualty  insur- 
ance and  the  disposition  thereof. 


g  203.       Life  ok  Casualty  Insurance  Corporations.        323 

No  deposit  of  securities  with  the  superintendent  shall  be  required 
from  such  corjwration,  association  or  society.  Any  corporation, 
association  or  society  refusing  or  neglecting  to  make  such  report,  or 
to  make  i)ayment  of  any  of  the  foes  required  by  law,  may,  upon  the 
suit  of  tlie  superintendent,  be  enjoined  by  the  supreme  court  from 
carrying  on  any  business  until  such  report  and  payment  shall  bt^ 
made  and  until  the  costs  of  such  action  be  paid. 

Source.— Former   §  202;   originally  revised  from  L.  1883,  chap.  175,  §§  7,  8. 

TAXATION. —  Co-operative,  life,  and  casualty  insurance  companies  organ- 
ized under  chap.  175  of  the  Laws  of  1885,  are  not  deprived  of  the  exemption« 
from  taxation,  etc.,  provided  for  by  that  act,  by  reincorporating  under  chap. 
690  of  Laws  of  1892.    Attorney-General  Rep.,  1892,  page  425. 

§  203.  Designation  of  principal  office  and  of  person  upon 
whom  process  may  be  served. 

Every  such  corporation  doing  business  within  this  state,  except 
such  as  have  already  made  such  designation,  and  every  such  cor- 
poration hereafter  formed  under  this  article,  shall,  before  doing 
any  business  in  this  state,  designate  some  place  Avithin  the  state 
as  the  principal  office  in  this  state  of  such  coi*poration,  and  some 
person  residing  in  the  same  city,  village  or  town  where  such  office 
is  located  as  a  person  upon  whom  service  of  legal  process  and 
papers  may  be  made  as  upon  such  corporation.  Such  designation 
shall  be  made  by  an  instrument  under  the  hand  of  the  president  and 
secretary  or  other  duly  authorized  officers  of  the  corporation,  and 
shall  be  filed  in  the  office  of  the  superintendent  of  insurance,  ii 
the  person  so  designated  shall  die  or  remove  from  such  place  an- 
other person  shall  be  appointed  in  his  place  within  thirty  days; 
and  such  attorney  or  location  of  principal  office  may,  at  the  option 
of  the  corporation,  be  changed  at  any  time.  iN'otice  of  such  change 
or  of  a  new  designation  of  a  person  upon  whom  service  may  be 
made  as  herein  provided,  under  the  hand  of  such  president  and 
secretary  or  other  officer,  shall  be  filed  with  the  superintendent 
within  thirty  days  after  such  change  or  new  designation  is  made. 
Upon  failure  to  comply  with  any  of  the  provisions  of  this  section 
within  thirty  days  after  written  notice  by  the  superintendent  of 
such  default  and  requiring  such  compliance,  the  corporation  shall 
cease  to  do  business  in  the  state  until  it  has  complied  therewith. 


324  The  Insueance  Law.  §  204. 

Source.— Former  §  203;  originally  revised  from  L.  1883,  chap.  175,  §  9. 

PROCESS. —  A  certificate  filed  by  an  association  in  attempted  compliance 
with  section  16,  General  Corporation  Law,  which  does  not  designate  the  place 
where  the  service  can  be  made,  and  is  not  accompanied  by  the  consent  of  the 
person  designated,  nor  filed  in  the  secretary  of  state's  office,  is  fatally 
defective.    McClure  v.  Supreme  Lodge,  41  App.  Div.,  131. 

§  204.    Foreign  corporations. 

No  such  corporation,  association  or  society  organized  under  the 
laws  of  any  other  state  or  territory  of  the  United  States  or  District 
of  Columbia,  or  foreign  countries,  except  such  secret  fraternal 
societies  having  subordinate  lodges  or  councils  as  are  now  author- 
ized to  transact  business  within  this  state  with  the  consent  of  the 
mperintendent,  shall  transact  business  herein  until  its  has  received 
from  the  superintendent  of  insurance  a  certificate  of  authority  to 
do  business  in  this  state,  a  duplicate  of  which  shall  be  filed  in  his 
office.  The  superintendent  shall  annually  issue  to  such  foreign 
corporation,  association  or  society  renewal  certificates  of  authority 
to  continue  its  business,  if  its  annual  report  is  satisfactory  to  him, 
which  certificate  shall  be  filed  in  the  office  of  the  clerk  of  the  county 
where  its  principal  office  is  located  within  this  state,  within  sixty 
days  after  filing  such  annual  report,  and  no  such  foreign  corpo- 
ration, associations  or  society,  except  secret  fraternal  societies 
above  specified,  shall  be  authorized  to  continue  such  business  after 
the  expiratior>  of  such  sixty  days  unless  such  certificate  shall  have 
been  so  receivea  and  filed.  The  superintendent  shall  refuse  a  cer- 
tificate of  authority  or  a  renewal  of  the  same  to  any  such  foreign 
corporation,  association  or  society,  except  such  secret  fraternal  so- 
cieties, when,  in  his  judgment,  such  refusal  will  best  promote  the 
public  'Uterests,  or  when  by  the  laws  of  the  state  or  territory  under 
which  the  same  is  organized,  the  corporations,  associations  or 
societies  of  this  state  doing  a  life  or  casualty  business  upon  the 
co-operative  or  assessment  plan  are  not  permitted  to  transact  such 
business  in  such  other  state  or  territory.  Provided,  however,  that 
except  in  the  case  of  fraternal  organizations,  and  except  in  the 
case  of  corporations  complying  witili  the  conditions  required  of 
domestic  corporations  in  prooiirlii!;-  certificate's  for  foreign  sintc-, 
as  provided  in  section  two  hundred  and  fonr-a  of  this  act,  no  cer- 
tificate of  authority  to  do  'bu.siness  in   this  stato   oxfO])t  I'onowal 


§  204-a.  Life  or  Casualty  Insurance  Corporations.        325 

certificates  of  aufchority  to  sucli  corporations,  associations  or  socie- 
ties as  were  on  April  twentj-sixth,  nineteen  hundred  and  six, 
authorized  to  transiact  business  within  the  state,  shall  be  issued  by 
the  superintendent  of  insurance  after  June  first,  nineteen  hundred 
and  six. 

When  any  other  state  or  territory  shall  impose  any  obligation 
upon  such  corporation,  association  or  society  of  this  state,  or  their 
agents  transacting  business  in  such  other  state  or  territory,  the  like 
obligations  are  hereby  imposed  upon  similar  corporations,  associa- 
tions or  societies  of  such  other  state  or  territory  and  their  agents  or 
representatives  transacting  business  in  this  state,  and  such  corpo- 
ration, association  or  society  of  such  other  state  or  territory,  and 
their  agents  and  representatives  shall  pay  all  licenses,  fees  ol*  pen- 
alties to,  and  make  deposits  with,  the  state  treasurer  imposed  by 
the  laws  of  such  other  state  or  territory  upon  any  such  corporation, 
association  or  society  of  this  state  doing  business  therein;  and  in 
case  of  failure  to  pay  the  same,  the  superintendent  shall  refuse  the 
certificate  of  authority  herein  provided  for,  or  cancel  such  certifi- 
cate in  case  one  shall  have  previously  been  issued. 

Source.— Former  §  204,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1883,  chap.  175,  §  10. 

Amended  by  L.  1916,  chap.  590.     In  effect  :\Iay  18,  1916. 

A  company  organized  as  a  mutual  life  insurance  company  should  not  be 
allowed  to  do  business  in  this  state  whose  by-laws  restrict  the  exercise  of 
its  corporate  powers  to  its  incorporators  and  such  persons  only  as  they  may 
permit  to  share  therein,  to  the  exclusion  of  the  membership  generally.  In 
such  case  it  seema  that  the  co-operation  or  mutual  principle  is  eliminated,  and 
is  contrary  to  the  Insurance  Law.  In  re  Boston  Mutual  Life  Assn.,  Attorney- 
General  Hep.,  1897,  page  133. 

§  204-a.    Reciprocal  certificate. 

Whenever  the  laws  or  public  officers  of  any  foreign  state  or 
territory  shall  require  as  a  condition  of  or  as  a  prerequisite  to 
the  entry  of  any  domestic  corporation  now  doing  business  under 
article  six  of  this  chapter,  into  suc^h  foreign  state  or  territory, 
or  to  the  issuance  to  it  of  a  license  to  do  business  therein,  that 
such  corporation  shall  file  with  any  official  or  department  of  such 
foreign  state  or  territory,  a  certificate  in  substance  or  to  the  effect 
that  corporations  of  such  foreign  state  or  territory  conducting 
a  similar  business  therein,  may,  upon  proper  application  to  the 
superintendent  of  insurance  of  this  state  and  upon  complying  with 


326  The  Insurance  Law.  §  :30  t-a. 

the  laws  of  this  state  in  respect  thereto,  be  permitted  to  enter  and 
carry  on  business  herein,  siiibject  to  the  laws  of  this  state,  the 
superintendent  of  insurance,  upon  the  application  of  such  domestic 
corporation  shall  issue  to  it  one  or  more  such  certificates,  pro- 
vided, however,  that  it  shall  establish  to  tlie  satisfaction  of  the 
superintendent  of  insurance  that  it  has  had  an  experience  of  at 
least  forty  years ;  that  its  membership  is  confined  and  limited  to 
members  of  one  fraternity ;  that  its  actual  expenses  of  management 
shall  be  limited  in  any  one  year  to  twenty  per  centum  of  the 
cash  income  actually  received  by  it  from  premiums,  assessments 
and  membership  fees;  that  it  is  possessed  of  assets  held  for  the 
/benefit  of  policy  or  certificate  holders  only,  either  in  cash  or 
invested  as  required  in  the  case  of  life  insurance  companies  by 
the  laws  of  this  state,  or  both,  at  least  equal  to  the  aggregate 
amount  of  its  accrued  liabilities  and  contingent  reserve  liability, 
whereof  there  shall  be  deposited  with  the  superintendent  of  in- 
surance the  sum  of  one  hundred  thousand  dollars  in.  the  stocks  or 
bonds  of  the  United  States  or  of  this  state  not  estimated  above 
their  current  market  value,  or  in  tbe  bonds  of  a  county  or  incor- 
porated city  in  tiiis  state  authorized  to  be  issued  by  the  legis- 
lature, not  estimated  above  their  par  value  nor  their  current  mar- 
ket value,  or  in  bonds  and  inortgages  on  improved,  unincumbered 
real  property  in  this  state,  worth  fifty  per  centum  more  than  the 
amount  loaned  thereon.  The  accrued  liabilities  and  contingent 
reserve  liability  to  be  determined  as  follows : 

1.  The  amount  of  all  reported  death,  or  other  benefit  claims 
then  remaining  unpaid,  including  unpaid  installments  on  claims 
payable  in  installments; 

2.  The  amount  of  all  accrued  liabilities,  including  assessments 
or  premiums  paid  in  advance  for  any  period  beyond  that  covered 
by  "  three"  hereunder ; 

3.  An  amount  equal  to  the  expected  claims  by  the  American 
experience  table  of  mortality  to  the  next  succeeding  date  when  a 
regular  assessment  or  premium  payment  falls  due,  the  nonpay- 
ment of  which  would  cause  the  insurance  under  outstanding  cer- 
tificates or  policies  to  cease  and  determine ; 

4.  In  event  that  the  corporation  has  outstianding  any  certificate's 
or  policies  under  which  anyl  pa^yment,  other  than  a  disability 
benefit,  is  promised  either  actually  or  contingently  to  bo  mnde  to 
a  living  certificate  or  policy  holder,  or  under  whi<^h  tlic  icnii  of 


§  201-a.   Life  or  Casualty  Insurance  Corporations.        327 

preiiiiuin  paid  is,  actually  or  contiiig'ently,  less  than  the  entire 
possible  temi  of  the  insurance  protection,  an  amount  equal  to  the 
required  reserve  for  all  the  benefits  promised  by  such  certificates 
or  policies,  computed  on  the  net  premium  'basis  according  to  the 
American  expenence  table  of  mortality  with  interest  at  four  per 
cemtum  per  annum ; 

5.  An  amount  equal  to  the  sinigle  year  term  premium  at  at- 
tained age  upon  each  and  every  outstanding  certificate  or  policy, 
not  covered  by  subdivision  four,  deteiinined  by  the  American  ex- 
perience table  of  mortality  with  interest  at  four  per  centum  per 
annum,  less  a  credit  of  the  amount  of  the  stipulated  or  stated  net 
mortuary  payment  to  be  made,  subject  to  the  laws  governing  said 
corporation,  during  said  year  by  or  on  account  of  each  such  certifi- 
cate or  policy,  which  credit  shall,  however,  in  no  event  exceed  the 
said  single  year  term  premium  charged  against  the  individual  cer- 
tificate or  policy  on  -account  of  which  such  credit  is  taken ; 

6.  Every  sudh  insurance  corporation  incorporated  under  the 
laws  of  any  other  state  of  the  United  States,  and  doing  business 
in  this  state,  sball  keep  on  deposit  with  the  superintendent  of 
insurance  of  this  state  or  with  the  auditor,  comptroller  or  gen- 
eral fiscal  officer  of  the  state  by  whose  laws  iti  is  incorporated 
the  same  amount  and  character  of  securities  which  are  required 
for  deposit  in  this  state  of  a  domestic  corporation.  The  super- 
intendent of  insurance  shall  be  furnished  with  the  certificate  of 
such  auditor,  comptroller  or  general  fiscal  officer,  under  his  hand 
and  official  seal,  that  he,  as  such  auditor,  comptroller  or  general 
fiscal  officer  of  such  state,  holds  in  trust  and  on  deposit  for  the 
benefit  of  the  policy  or  certificate  holders  of  the  corporation  such 
stocks  and  securities.  Such  certificate  siliall  embrace  the  items 
of  the  securities  so  beld  and  shall  state  that  the  officer  making  it 
is  satisfied  that  the  securities  are  worth  the  amount  required  by 
law.  Any  foreign  corporation  permitted  or  seeking  to  do  busi- 
ness in  this  state  of  tlie  character  herein  described  which  invests 
its  funds  in  accordance  with  the  laws  of  the  state  in  which  it  is 
incorporated  siliall  be  held  to  meet  tbe  requirements  of  this  article 
for  the  investment  of  funds. 

Added      by  L.  1916,  chap.  590.     In  effect  May  18.  1916. 

Note. —  This  section  was  added  by  L.  1916,  chap.  590,  and  under  its  pro- 
visions the  Superintendient  of  Insurance  can  issue  to  a  domestic  corporation 
a^pplying  for  a  license  in  a  foreign  state  a  reciprocal  certificate  to  the  effect 
that  a  like  corporation  will  be  permitted  to  do  business  here,  which  has  had 


328  The  Insukance  Law.  §  205. 

forty  years'  experience,  whose,  luemibersliip  is  limited  to  persons'  who  are 
members  of  one  fraternity  and  whose  expense  of  managment  in  any  one  year 
does  not  exceed  twenty  per  centum  of  its  "premium"  income;  also,  the 
corporation  must  have  a  deposit  in  securities  of  one  hundred  thousand  dollars 
and   maintain   certain   reserves. —  Ed. 

§  205.    Reserve  or  emergency  fund. 

Every  such  corporation,  association  or  society,  except  casualty 
associations  or  societies,  shall  accumulate  and  maintain  at  all 
times  a  reserve  or  emergency  fund  of  an  amount  not  less  than  the 
proceeds  of  one  deatli  or  disability  assessment,  or  periodical  call 
on  all  policy  or  certificate  holders  thereof,  and  at  least  equal  to  the 
amount  of  its  maximum  certificate  or  policy,  and  also  at  least 
equal  to  the  cost  of  insurance  for  all  policies  in  accordance  with 
the  American  experience  table  of  mortality  until  the  next  call  or 
assessment  is  due  and  payable  over  and  above  all  liabilities,  includ- 
ing existing  death  claims.  Such  fund  shall  be  held  for  the  benefit 
or  protection  of  its  members,  their  legal  representatives  or  bene- 
ficiaries. If  such  fund  is  in  excess  of  the  reserve  or  emergency 
fund  required  by  this  section,  the  excess,  or  any  portion  thereof, 
may  be  used  in  reduction  of  assessments  or  premium  calls  upon 
policy  or  certificate  holders ;  and  if  in  excess  of  double  such  reserve 
or  emergenc;^'  fund  and  not  less  than  the  sum  of  one  hundred  thou- 
sand dollars,  the  pro  rata  excess  on  any  policy  or  certificate  ter- 
minated by  death  or  surrender  may  be  refunded  to  the  holder  or 
beneficiary  provided  that  nothing  contained  in  this  article  shall 
be  construed  to  permit  any  contract  promising  any  fixed  cash  pay- 
ment to  any  living  certificate  or  policy  holder,  and  provided  fur- 
ther that  any  reserve  provided  for  by  the  articles  of  association, 
constitution  or  by-laws  or  by  any  contract  with  members  shall  not 
be  used  in  violation  thereof  and  shall  be  treated  as  a  liability. 
Every  such  casualty  association  or  society  shall  maintain  a 
reserve  or  emergency  fund  of  at  least  eight  thousand  dollars,  if  the 
maximum  policy  issued  by  such  association  or  society  be  for  five 
thousand  dollars  or  more  or  a  reserve  or  emergency  fund  of  two 
dollars  for  each  five  tliousand  dollars  of  insurance  in  force,  if  the 
maximum  policy  issued  by  such  association  or  society  be  for  less 
than  five  thousand  dollars,  and  thereafter  five  per  cent  of  t\w 
amount  realized  on  each  periodical  call  shall  be  set  apart  and  added 


§  205.       Life  ok  Casualty  Insurance  Corpokations.        329 

thereunto,  unless  the  same  be  already  accumulated,  until  such  fund 
shall  be  equal  to  two  dollars  on  each  five  thousand  dollars  of  insur- 
ance in  force.  In  case  such  reserve  or  emergency  fund  or  any 
portion  thereof  shall  have  been  used  by  any  such  corporation  or 
society  for  the  purpose  for  which  the  same  was  created  or  main- 
tained, the  amount  so  used  shall  be  made  up  and  restored  to  said 
fund  within  six  months  thereafter.  Such  fund  may  be  held  in 
cash,  or  invested  in  the  same  class  of  securities  required  for  the 
investment  of  funds  by  domestic  life  insurance  corporations. 

'No  foreign  corporation,  association  or  society  shall  be  author- 
ized to  transact  any  business  authorized  by  this  article  w^ithin  this 
state  unless  it  furnishes  evidence  satisfactory  to  the  superintendent 
of  insurance  that  it  has  accumulated  a  fund  equal  in  amount  to 
that  required  by  this  section,  and  that  such  accumulation  is  per- 
mitted by  the  laws  of  the  state  or  country  where  it  is  incorporated 
and  that  it  is  held  for  the  benefit  of  policy  or  certificate  holders 
only  and  invested  as  required  by  such  laws.  If  any  such  corpora- 
tion, association  or  society  is  authorized  by  the  law  under  which  it 
is  incorporated  to  issue  contracts  of  insurance  not  authorized  by 
this  article,  it  may  be  permitted  to  transact  in  this  state  the  kind 
of  business  authorized  by  this  article  upon  complying  in  all  other 
respects  with  the  requirements  of  this  chapter  and  filing  with  the 
superintendent  of  insurance  an  agreement  duly  executed  by  its 
proper  ofiicers  that  such  corporation,  association  or  society  will  not 
enter  into  or  issue  within  the  state  of  E"ew  York  any  contract  of 
insurance,  policy  or  agreement  not  authorized  by  this  article 
Upon  a  breach  of  said  agreement  by  any  such  corporation,  associa- 
tion or  society,  the  superintendent  of  insurance  shall  forthwith 
revoke  and  cancel  its  authority  to  transact  business  in  this  state. 

The  annual  report  to  the  superintendent  of  insurance  required 
in  section  202  of  this  article  shall  be  in  lieu  of  all  other  reports 
required  by  law. 

Source. — Former  §  205.  as  amended  by  L.  1906,  chap,  326:  ne^- 
ACCUMULATION  OF  RESERVE  FUND.— This  section,  authorizing  the 
creation  of  a  reserve  fund  to  be  used  for  the  payment  of  death  losses,  is  not 
to  be  construed  so  as  to  permit  such  associations  to  accumulate  a  reserve 
fund  wholly  from  the  contributions  of  one  class  of  members  and  then  devote 
it  to  the  payment  of  death  losses  of  another  class  who  in  no  way  contributed 
to  it.     People  ex  rel.  Atty.-Gen.  v.  L.  R.  Assn..  150  N.  Y.,  94. 


330  The  Insurance  Law.  §  205. 

USE  OF  RESERVE  FUND.— Where  the  reserve  fund  was  to  be  invested 
and  could  not  be  used  to  pay  death  or  indemnity  claims  of  holders  of  certifi- 
cates, except  an  increase  thereof  over  $100,000,  which  might  be  credited  to 
the  mortuary  fund  for  the  payment  and  adjustment  of  claims,  such  fund, 
although  not  distributable  while  under  $100,000  to  the  beneficiary  of  an 
insured  in  a  department  of  the  insurance  business  of  the  company,  which, 
at  the  time  of  his  death,  was  continued  in  its  business,  was  yet  available  as 
regards  the  amount  payable  under  a  certificate  issued  to  a  member  in  a 
department  of  the  business  which  had  subsequently  been  discontinued,  and 
from  which  some  members  had  been  transferred  to  another  department, 
where  such  certificate  holder,  without  notice  of  any  change  in  the  business, 
had  continued  thereafter  to  pay  his  monthly  assessments  and  the  company 
to  receive  them.    Bird  v.  Mutual  Union  Assn.,  30  App.  Div.,  346. 

The  rights  and  liabilities  of  the  parties  to  a  death  claim  upon  the  funds 
of  an  insolvent  mutual  aid  association  in  the  hands  of  a  receiver  are  meas- 
ured by  the  contract  created  by  the  constitution,  by-laws  and  certificate  of 
membership,  provided  the  same  were  authorized  by  law.  People  v.  Grand 
Lodge,  156  N.  Y.,  533. 

USE  OF  RESERVE  FUND.— Where  the  constitution  of  the  company  per- 
mitted its  board  of  trustees  in  their  discretion  to  use  securities  forming  the 
reserve  fund  "  to  meet  any  want  or  necessity  of  the  association  which  may 
hereafter  arise  by  reason  of  unforeseen  emergencies,"  it  was  held  that  this 
only  applied  while  the  company  was  alive  and  in  the  hands  of  its  board 
of  trustees,  and  so  had  no  effect  upon  the  disposition  of  its  funds  after  its 
dissolution.    Matter  of  E.,  R.  &  F.  L.  Assn.,  131  N.  Y.,  354. 

The  reserve  fund  of  an  assessment  life  insurance  company  should  be  dis- 
tributed by  the  receiver  to  the  policyholders.  Farmers'  Loan  &  Trust  Co. 
V.  Aberle,  19  App.  Div.,  79. 

The  reserve  fund  of  a  mutual  benefit  society  should  not  be  used  by  the 
directors  for  the  payment  of  its  notes.    McClure  v.  Levy,  147  N.  Y.,  215. 

SPECIFIC  PERFORMANCE.— An  action  for  the  specific  performance  of 
an  insurance  contract  to  divide  a  reserve  fund  cannot  be  maintained  by  a 
policyholder;  the  action  lies  against  the  officers  and  not  the  corporation. 
Swan  V.  Mut.  Res.  Fund  Life  Assn.,  20  App.  Div.,  255. 

EXTRA  ASSESSMENTS. —  The  provisions  relating  to  extra  assessments 
expressed  in  the  certificate  of  insurance  in  terms  should  be  free  from  ambigu- 
ity. Matter  of  New  York  Casualty  Company,  Attorney-General  Rep.,  1897, 
page  118. 

Co-operative  life  and  casualty  insurance  companies  cannot  issue  policies 
with  cash  surrender  value.  The  management  of  such  companies  cannot  be 
confided  to  a  portion  of  the  membership  to  the  exclusion  of  any  other  portion 
thereof.    Conn.  Indem.  Assn.,  Attorney-General  Rep.,  1893,  page  114. 

The  certificate  of  an  industrial  benefit  association  must  provide  for  assess- 
ments sufficient  to  meet  the  maximum  amount  in  a  single  policy.  Attorney- 
General  Re,p.,  May  5,  1893. 

An  industrial  benefit  association  may  not  evade  the  law  prohibiting  the 
payment  of  fixed  cash  payments  by  provi'linir  in  policies  for  the  return  of  a 
"portion  of  the  premiums  actually  paid  in  cash."  Attorney-General  Rep., 
Oct.  29,  1895. 


§  20'6.       Life  or  Casualty  Insueance  Corporations.        331 

Waiver  of  all  rights  to  the  provisions  of  §§  205-210  is  not  in  accordance 
with  the  provisions  of  article  VI  of  the  Insurance  Law.  In  re  Ind.  Benefit 
Assn.,  Attorney-General   Rep.,   1892,  page  427. 

By  the  terms  of  a  certificate  for  $2,000,  issued  in  1884  by  a  relief  associa- 
tion to  one  H,  as  a  member  of  Class  A,  the  beneficiary  was  entitled  to  have  an 
assessment  imposed  upon  members  of  ^hat  class  and  to  receive  the  proceeds 
not  to  exceed  $2,000.  Two  years  thereafter  said  class  wrs  consolidated  with 
two  others  and  under  the  by-laws,  as  amended,  the  beneficiary  became  entitled 
to  have  an  assessment  made  upon  all  members  of  the  association  and  to  receive 
the  proceeds  not  to  exceed  $2,000.  A  further  amendment  to  the  by-laws  in 
1892,  provided  that  no  rates,  terms  or  conditions  should  be  changed  upon 
policies  in  force  November,  1892.  In  1893  the  by-laws,  by  amendment,  pro- 
vided that  the  amount  to  be  paid  to  beneficiaries  under  policies  in  force  Sep- 
tember 30,  1892,  should  be  ascertained  in  accordance  with  the  by-laws  of  1892. 
In  an  action  to  recover  upon  the  certificate  held,  that  the  beneficiary  was  only 
entitled  to  receive  the  amount  of  an  assessment  upon  all  the  members  of  the 
association  at  the  death  of  H.  at  the  rates  provided  by  the  by-laws  of  1884  and 
not  the  sum  of  $2,000.    Heath  v.  New  York  Safety  Reserve  Fund,  69  Misc.,  452. 

RESERVE. —  The  fund  referred  to  and  required  under  §  206  is  the  reserve 
or  emergency  fund  specified  in  §  205.    Attorney-General  Rep.,  1902,  page  201. 

§  206.    Reincorporation  of  existing  societies. 

Any  existing  domestic  corporation,  transacting  the  business  of 
life  or  casualty  insurance,  or  both,  upon  the  co-operative  or  assess- 
ment plan,  may  reincorporate  under  the  provisions  of  this  article, 
under  its  existing  corporate  name,  by  filing  with  the  superin- 
tendent the  declaration,  required  by  this  article,  signed  and  duly 
acknowledged  by  a  majority  of  its  board  of  directors,  with  a  state- 
ment in  like  manner  signed  and  acknowledged  by  them,  that  such 
corporation  has  accumulated  the  fund  required  by  this  article  of 
corporations  formed  thereunder,  and  that  the  same  is  deposited  In 
bank  or  trust  company,  to  be  held  and  maintained  for  the  payment 
of  losses  by  death,  sickness,  physical  disability  or  other  purposes 
for  which  such  fund  must  be  held,  and  the  certificate  of  the  attor- 
ney-general of  the  state,  whereupon  the  superintendent  shall  record, 
and  deliver  to  such  corporation,  a  certified  copy  of  such  declaration 
and  of  such  certificate,  together  with  his  license  to  transact  busi- 
ness, and  upon  filing  the  same  in  the  office  of  the  clerk  of  the 
county  wherein  its  principal  office  is  located,  the  same  shall  there- 
upon be  deemed  to  be  incorporated  under  the  provisions  of  this 
p.rticle.  It  shall  not  be  obligatory  upon  any  such  existing  corpora- 
tion, to  reincorporate  hereunder,  and  any  such  domestic  corporation 


332  The  Insueance  Law-  §  207. 

may  continue  to  exercise  all  the  rights,  powers  and  privileges  not 
inconsistent  with  this  article,  pursuant  to  its  articles  of  association 
or  incorporation,  the  same  as  if  reincorporated  under  this  article. 

Source. — Former  §  206;  originally  revised  from  L.  1883,  chap.  175,  '§  12,  as 
amended  by  L.  1887,  chap.  285. 

ALTERATION  OF  CHARTER.— A  company  formed  for  the  purpose  of 
transacting  the  business  of  assessment  life  insurance  cannot  alter  its  charter 
to  include  casualty  insurance  if  thereby  the  acquired  rights  and  liabilities 
of  existing  policyholders  are  altered.  In  re  Chenango  Mut.  Relief  Society, 
Attorney-General  Rep.,  1892,  page  293. 

When  a  co-operative  insurance  association,  incorporated  under  chap.  175  of 
1883,  reincorporates  under  section  206,  its  corporate  entity  is  not  changed, 
but  it  merely  becomes  entitled  to  the  benefits  and  privileges  of  the  latter  act. 
Matter  of  Empire  State  Supreme  Lodge,  118  App.  Div.,  616. 

Under  §  209,  the  policyholders  have  the  sole  power  to  adopt  by-laws  gov- 
erning the  number  of  directors  and  fixing  their  term  of  office;  the  executive 
committee  of  a  co-operative  assessment  insurance  corporation  reincorporated 
under  §  206  of  the  Insurance  Law  cannot  adopt  by-laws  fixing  the  number 
and  terms  of  office  of  directors  without  due  notice  to  the  policyholders,  and 
directors  elected  pursuant  to  such  by-laws  are  not  entitled  to  office.  The 
validity  of  such  an  election  may  be  tested  in  a  proceeding  taken  under  §  27 
of  the  General  Corporation  Law.  Matter  of  Empire  State  Supreme  Lodge, 
118  App.  Div.,  616;  affi'g  53  Misc.,  344. 

A  corporation  formed  under  chap.  175  of  1883,  and  desiring  to  reincorporate 
under  the  provisions  of  §  206  of  the  Insurance  Law,  must  file  with  the 
superintendent  the  declaration  required,  namely,  that  such  corporation  has 
accumulated  the  fund  required  by  this  article  of  corporations  formed  under 
that  article.  In  re  Chenango  Mut.  Relief,  Attorney-General  Rep.,  1893, 
page  93. 

The  fund  referred  to  and  required  under  §  206  is  the  reserve  or  emergency 
fund  specified  in  §  205.    Attorney-General  Rep.,  1902,  page  201. 

§  207.  Visitation  by  superintendent;  proceedings  to  restrain 
corporation  from  doing  business. 

All  corporations,  associations  and  societies  to  which  this  article 
is  applicable,  with  their  books,  papers  and  vouchers,  shall  be  sub- 
ject to  visitation  and  inspection  by  the  superintendent  of  insurance 
or  such  person  as  he  may  designate.  The  superintendent  may 
address  any  inquiries  to  any  such  corporation,  association  or 
society  in  relation  to  its  doings  or  condition,  or  any  other  matter 
connected  with  its  transactions  relative  to  the  business  contem- 
plated by  this  article.  All  officers  of  such  corporation,  association 
or  society  shall  promptly  reply  in  writing  to  all  such  inquiries, 


§  207.        Life  or  Casualty  Insurance  Corporations.       833 

under  the  oath  of  its  president  or  secretary  or  other  officers,  if 
required.  Whenever  it  shall  appear  to  the  superintendent  of  in- 
surance on  investigation  or  examination  tliat  the  actual  expenses 
of  management  of  any  corporation,  association  or  society  to  wliicli 
this  article  is  applicable,  whether  heretofore  or  hereafter  author- 
ized or  permitted  to  do  business  within  this  state,  for  the  year  pre- 
ceding the  year  in  which  such  investigation  or  examination  is 
made,  were  more  than  thirty-five  per  centum  of  the  cash  income 
actually  received  by  it  from  premiums,  assessments  and  member- 
ship fees,  the  authority  or  renewal  of  authority,  if  it  be  a  foreign 
corporation,  association  or  society,  shall  be  revoked  and  the  super- 
intendent shall  cause  notice  of  such  revocation  to  be  published  for 
four  weeks  in  the  state  newspaper  published  in  the  county  of  Al- 
bany, and  no  new  insurance  shall  thereafter  be  written  by  such 
corporation,  association  or  society  within  this  state ;  and  if  it  be  a 
domestic  corporation,  association  or  society,  it  shall  be  the  duty  of 
the  superintendent  of  insurance  to  cause  to  be  served  on  the  presi- 
dent or  other  officer  of  such  corporation,  association  or  society,  a 
notice  in  Avriting  to  immediately  cease  the  transaction  of  new  busi- 
ness and,  in  the  event  of  their  failure  so  to  do,  he  shall  report  the 
facts  of  such  investigation  and  examination  and  his  proceedings 
thereunder,  which  shall  be  prima  facie  evidence  of  the  facts  therein 
stated,  to  the  attorney-general,  who  if  he  approves  of  the  same 
upvon  investigation  by  him  after  notice  to  such  corporation,  associ- 
ation or  society,  is  hereby  authorized  thereon  to  institute  in  the 
same  manner  and  to  prosecute  any  and  all  like  proceedings  as  are 
now  authorized  or  permitted  against  an  insolvent  corporation  in- 
cluding the  appointment  of  a  temporary  and  permanent  receiver 
or  receivers  of  such  corporation,  association  or  society  and  the  dis- 
tribution of  the  assets  of  the  same,  and  powers  and  jurisdiction  to  ^ 
grant  like  remedies  are  hereby  conferred  upon  the  supreme  court 
of  this  state  upon  his  application.  When  the  superintendent,  on 
investigation,  shall  be  satisfied  that  any  corporation  organized  un- 
der the  laws  of  this  state,  doing  business  in  this  state  of  the  char- 
acter defined  in  this  article  is  insolvent  because  of  matured  death 
claims  or  other  obligations  due  and  unpaid  exceeding  its  assets 
and  death  or  disabilitv  assessments  or  periodical  calls  made  or  in 
process  of  collection  at  the  date  of  such  investigation,  or  has  ex- 


a34  The  Insurance  Law.  §  208. 

ceeded  its  powers,  failed  to  comply  with  any  provision  of  law,  or 
is  conducting  business  fraudulently,  he  shall  report  the  facts  to  the 
attorney-general,  who,  if  he  shall  be  of  the  opinion  that  tlie  facts 
require  such  action,  must  thereupon  apply  to  the  supreme  court, 
at  a  special  term  thereof,  within  the  judicial  district  in  which  the 
principal  office  of  such  corporation,  association  or  society  within 
this  state  is  located,  for  an  order  requiring  the  officers  of  such  cor- 
poration, association  or  society  to  show  cause,  at  a  reasonable  time 
and  place  within  such  district,  why  such  corporation,  association 
or  society  should  not  be  restrained  from  continuing  to  transact 
business,  with  power  to  the  court  to  adjourn  the  hearing  thereon 
from  time  to  time,  not  exceeding  sixty  days  in  all. 

Source. — Former  §  207,  as  amended  by  L.  1905,  dhap.  569;  originally  revised 
from  L.  1883,  chap.  175,  §  13,  as  amended  by  L.  1887,  chap.  285,  §   14. 

See  §  1197,  Penal  Law.  Neglect  of  officers  to  make  a  report  or  to  make  a 
false  report,  a  misdemeanor. 

The  limitation  imposed  by  this  section  applies  to  companies  which  unite 
both  life  and  casualty  insiu-ance  in  the  same  policy.  Opinion  of  Attorney-Gen- 
eral, August  29,  1907. 

The  right  of  action,  if  any,  against  the  directors  of  a  co-operative  and 
assessment  life  insurance  association,  arising  out  of  their  diversion  and  mis- 
application of  its  safety  fund,  inheres  in  the  receiver  of  the  association 
appointed  in  an  action  for  its  dissolution.    Gifford  v.  Clapp,  44  App.  Div.,  192. 

§  208.    Hearing  thereon. 

Such  corporation,  association  or  society,  in  case  it  is  alleged  to 
be  insolvent,  to  have  exceeded  its  powers,  failed  to  comply  with 
any  other  provision  of  law,  or  is  conducting  its  business  fraudu- 
lently, as  specified  in  the  last  paragraph  of  the  preceding  section, 
shall  be  entitled  to  be  heard,  and  to  a  trial  by  jury  of  the  facta 
stated  in  the  report,  if  the  same  shall  be  traversed,  and  to  examine 
papers  and  witness  imder  oath  in  the  usual  mode  of  trials  of  ac- 
tions. If  the  trial  is  by  jury  the  court  shall  submit  to  the 
jury  specific  requests  to  find  covering  the  matter  in  issue  sepa- 
rately, and  the  jury  shall  return  a  special  verdict  upon  each  ques- 
tion submitted,  and  if  by  such  verdict  it  shall  be  found  that  the 
corporation,  association  or  society  is  insolvent  because  of  matured 
death  claims  or  other  obligations  due  and  unpaid  exceeding  its 
assets  as  hereinbefore  provided,  or  has  been  conducting  business 
fraudulently,  the  court  may  render  judgment  that  it  and  each  offi- 


§  208.       Life  or  Casualty  Insurance  Corporations.       335 

cer  thereof  be  perpetually  enjoined  from  exercising  any  corporate 
rit>-hts,  privileges  or  franchises,  and  that  it  be  dissolved  and  that 
R  receiver  be  appointed,  an  account  taken,  and  an  equitable  distri 
bution  of  its  property  among  its  creditors  and  members  be  made. 
If  no  charge  of  insolvency  is  made  in  such  report,  or,  if  made,  is 
not  established  by  the  verdict  of  the  jury,  but  it  shall  be  found  by 
such  verdict  tliat  the  corporation,  association  or  society  has  exceeded 
its  corporate  powers  or  failed  to  comply  with  any  provision  of 
this  article  or  has  conducted  its  business  unlawfully,  the  court  may 
make  and  enter  judgment  enjoining  and  restraining  it  from  the 
commission  of  such  acts  or  such  of  them  as  the  court  may  deter- 
mine, and  in  case  of  failure  to  desist  therefrom  Avithin  the  time 
to  be  s{>ecified  in  such  judgment  that  the  corporation  be  dissolved. 

Pending  the  trial  of  the  facts  stated  in  such  report,  the  court 
may,  upon  motion  of  the  attorney-general  and  upon  notice  to 
the  corporation,  association  or  society,  gTant  an  injunction  restrain- 
ing it  and  its  directors  and  other  officers  from  collecting  any  debt 
or  demand  and  from  paying  out  or  in  any  way  transferring  or  de- 
livering to  any  person  any  money,  property  or  effects  during  the 
pendency  of  the  proceedings  except  by  direction  of  the  court,  and 
may  apjx^int  one  or  more  temporary  receivers  of  its  property,  with 
all  tlie  powers  of  temporary  receivers  in  such  cases. 

Neither  this  nor  the  preceding  section  shall  in  any  way  apply 
to  or  abridge  any  of  the  rights  or  privileges  of  fraternal  beneficiary 
societies,  orders  or  associations,  as  defined  and  provided  for  by 
article  seven  of  this  chapter,  or  to  the  casualty  department  of  any 
casualty  insurance  corporation,  association  or  society  upon  the 
co-operative  or  assessment  plan  as  defined  and  provided  for  by 
this  article,  or  to  any  co-operative  assessment  corporation,  associa- 
tion or  society  lawfully  transacting  industrial  or  health  insurance 
exclusively  or  both  exclusively  but  whose  maximum  policies  there- 
for do  not  in  any  case  exceed  the  sum  of  two  hundred  dollars. 

Source. —  Former  §  208,  as  amended  by  L.  1905,  chap.  569;  L.  1906,  chap.  326. 
Last  paragraph  from  §  3,  L.  1905,  chap.  5G9;  originally  revised  from  L.  1883, 
chap.  175,  §  13,  as  amended  by  L.  1887,  chap.  285. 

DEATH  CLAIMS. —  Holders  of  death  cteiims  must  have  their  status 
defined  as  of  the  date  of  the  commencement  of  the  proceedings.  Matter  ol 
E.  R.  F.  L.  Assn.,  131  N.  Y.,  354. 


336  TrrE  Insurance   I.aw.  §  209. 

§  209.    Corporations  subject  to  this  article:  annual  meet- 
ings; examinations;  transfers  of  risk;  reinsurance. 

Every  corporation,  company,  societ}^,  organization  or  associa- 
tion of  this  or  any  other  state  or  country  transacting  the  husiness  of 
life  or  casualty  insurance  upon  the  co-operative  or  assessment  plan, 
as  defined  in  this  article,  including  those  heretofore  organized  with 
a  capital  stock  and  transacting  such  husiness,  hut  not  including  anj 
that  shall  hereafter  be  organized  with  a  capital  stock,  shall  be  sub- 
ject to  all  the  provisions  of  this  article,  and  not  to  the  provisions  of 
article  two,  and  every  such  corporation,  company^  society,  organize 
tion  or  association  of  this  state,  shall  hold  within  the  county  iu 
which  its  principal  office  is  located  in  this  state,  a  stated  annual 
meeting  of  their  members  or  policy  holders  or  representatives  of 
local  boards  of  subordinate  bodies,  in  such  manner  and  subject  to 
such  regulations,  restrictions  and  provisions  as  the  constitution  and 
by-laws  of  the  same  may  provide.  Tn  cases  of  secret  or  fraternal 
societies  having  a  grand  or  supreme  body,  such  meeting  of  the 
supreme  or  grand  body  may  be  at  such  time  and  place  as  may  be 
designated  by  it.  At  such  meeting  a  full  and  specific  report  of  all 
receipts  and  expenditures  of  the  preceding  year  or  since  the  last 
meeting,  as  the  case  may  be,  shall  be  submitted.  Not  less  than  ^Ye 
days'  notice  of  each  meeting  shall  be  given  to  each  director  and  to 
each  member  and  policy  holder,  who  shall  have  been  such  for  thirty 
days,  in  such  manner  as  the  by-laws  may  direct,  except  that  in  lieu 
thereof  such  notice  may  be  given  to  the  subordinate  body  of  a  society 
having  a  grand  or  supreme  body,  or  to  a  local  board  subordinate 
to  the  association.  Every  such  association,  corporation  or  society, 
other  than  secret  fraternal  societies  now  authorized  to  do  busi- 
ness in  this  state,  must  hereafter,  before  the  adoption  of  any  by-law 
or  amendment  thereto,  cause  the  same  to  be  mailed  to  the  members 
and  directors  of  such  association,  society  or  corporation,  together 
with  a  notice  of  the  time  and  place  when  the  same  shall  be  consid- 
ered, which  notice  shall  be  the  same  as  hereinbefore  required  for 
stated  meetings.  All  associations,  societies,  companies,  corpora- 
tions or  organizations  now  transacting  or  hereafter  desiring  to  trans- 
act  the  business  of  life  or  casualty  insurance  in  this  state  upon  any 
other  plan  than  that  defined  in  and  by  this  article,  shall  comply 


§  209.        Life  or  Casualty  Insurance  CoRroRATiONS.  337 

with  all  tlie  provisions  of  the  general  life  and  health  insurance  laws. 
No  such  corporation  organized  under  the  laws  of  this  state  shall 
transfer  its  risks  to  or  reinsure  them  in  any  other  corporation  un- 
less the  contract  or  transfer  or  reinsurance  is  first  submitted  to  and 
approved  by  a  two-thirds  vote  of  a  meeting  of  the  insured  called  to 
consider  the  same,  of  which  meeting  a  written  or  printed  notice 
shall  be  mailed  to  each  member,  certificate  holder  or  policy  holder 
at  least  thirty  days  before  the  day  fixed  for  such  meeting.  If  such 
transfer  or  reinsurance  shall  be  approved,  every  member,  certificate 
holder  or  policy  holder  of  the  corporation  who  shall  file  with  tbp 
secretary  thereof  within  ten  days  after  the  meeting  a  written  notice 
of  his  preference  to  be  transferred  to  some  other  corporation  than 
that  named  in  the  contract,  shall  be  accorde.d  all  the  rights  and  priv- 
ileges, if  any,  in  aid  of  such  transfer  as  would  have  been  accorded 
under  the  terms  of  such  contract  had  he  been  transferred  to  the  cor- 
poration named  therein.  No  such  corporation,  association  or  so- 
ciety organized  under  the  laws  of  this  state  shall  transfer  its  risks 
or  assets  or  any  part  thereof  to,  or  reinsure  its  risks  or  any  pan 
thereof  in  any  insurance  corporation  or  association  of  any  other 
state  or  country  which  is  not  at  the  time  of  such  transfer  or  rein- 
surance authorized  to  do  insurance  business  in  this  state  under  the 
laws  thereof.  No  corporation,  company  or  association,  possessed 
of  a  capital  stock,  as  specified  in  this  section,  shall  advertise  such 
capital  stock  in  or  on  any  printed  matter,  advertisement,  policy  or 
certificate  issued  or  circulated,  or  to  be  issued  or  circulated  in  this 
state;  nor  shall  any  agent  or  broker  or  solicitor  advertise  it  as  a 
stock  company,  or  as  possessed  of  a  capital  stock,  but  its  total  as- 
sets may  be  advertised  as  assets. 

Source.— Former  §  209,  as  amended  by  L.  1894,  chap.  271;  originally  revised 
from  L.  1883,  chap.  175,  §  10,  as  amended  by  L.  1889,  chap.  184. 

See  §  1196,  Penal  Law.  Officer  transferring  insurance  to  company  not 
authorized  to  do  business  in  this  state,  a  misdemeanor. 

See  §  28  et  seq..  General  Corporation  Law,  chap.  28  of  1909.  Election  of 
directors,  annual  meetings. 

The  management  of  such  companies  cannot  be  confided  to  a  portion  of  the 
membership  to  the  exclusion  of  any  other  portion  thereof.  Attorney-General 
Rep.,  1893,  page  114. 

Under  §  209,  the  policyholders  have  the  sole  power  to  adopt  by-laws  gov 
erning  the  number  of  directors  and  fixing  their  term  of  office;  the  executive 


338  The  Insurance  Law.  §  210. 

committee  of  a  co-operative  assessment  insurance  corporation  reincorporated 
under  §  206  of  the  Insurance  Law  cannot  adopt  by-laws  fixing  the  number 
and  terras  of  oflBce  of  directors  without  due  notice  to  the  policyholders,  and 
directors  elected  pursuant  to  such  by-laws  are  not  entitled  to  office.  The 
validity  of  such  an  election  may  be  tested  in  a  proceeding  taken  under  §  27 
of  the  General  Corporation  Law;  where  a  co-operative  insurance  company 
originally  incorporated  under  chap.  175  of  1883,  reincorporated  under  §  200 
of  the  Insurance  Law,  its  corporate  entity  i?  not  changed,  but  it  merely 
becomes  entitled  to  the  benefits  of  said  Insurance  Law.  Matter  of  Empire 
State  Supreme  Lodge,  118  App.  Div.,  616;  aff'g  53  Misc.,  344. 

Every  insurance  corporation  other  than  secret  fraternal  societies,  must, 
before  the  adoption  of  by-laws  cause  the  same  to  be  mailed  to  the  members 
and  directors  with  a  notice  of  the  time  and  place  when  the  same  shall  be 
considered.    Matter  of  Empire  State  Supreme  Lodge,  118  App.  Div.,  616. 

By  sections  201  and  209,  co-operative  life  and  casualty  companies  are  made 
subject  to  the  provisions  of  Article  6  herein.  Opinion  of  Attorney- General, 
August  29,  1907. 

§  210.  Payment  of  maximum  amount  of  policy;  agreements 
for  benefits;  notice  of  assessment. 

Every  policy  or  certificate  hereafter  issued  by  any  corporation 
doing  business  under  tbis  article,  and  promising  a  payment  to  be 
made  upon  a  contingency  of  death,  sickness  or  accident,  shall 
specify  the  sum  of  money  which  it  promises  to  pay  u]xyn  each  con- 
tingency insured  against,  and  the  number  of  days  after  receipt 
of  proof  of  the  happening  of  such  contingency  on  which  such  pay- 
ment shall  be  made.  Upon  the  occun-ence  of  such  contingency, 
unless  the  contract  shall  have  been  avoided  by  fraud,  or  by  breach 
of  its  conditions,  the  corporation  shall  be  obligated  to  the  beneficiary 
for  such  payment  at  the  time  and  to  the  maximum  amount  specified 
in  the  policy  or  certificate.  If  the  superintendent  of  insurance 
shall  be  satisfied  upon  investigation  that  any  such  corporation  has 
refused  or  failed  to  make  such  payment  for  thirty  days  after  it  be- 
came due,  and  after  proper  demand,  he  shall  notify  the  corporation 
to  issue  no  new  policies  or  certificates  until  such  indebtedness  ia 
fully  paid ;  and  no  ofiicer  or  agent  of  the  corporation  shall  make, 
sign  or  issue  any  policy  or  certificate  of  insurance  while  such  notice 
is  in  force. 

No  corporation  organized  or  transacting  the  business  of  life  or 
casualty  insurance  under  the  provisions  of  this  article  shall  here- 
after make  any  promise  or  agreement  with  its  policy  or  certi- 


§  210.         Life  OR  Casualty  Insurance  Corporations.  339 

ficate  holders  or  members  for  the  payment  of  money  upon  the  ex- 
piration of  a  fixed  period  unless  on  acount  of  death  or  disability; 
and  no  foreign  corporation,  association  or  society  authorized  to 
transact  the  business  of  life  or  casualty  insurance  under  the  pro- 
visions of  this  article,  which  shall  hereafter  make  any  such  con- 
tract, shall  receive  a  license  or  the  renewal  of  its  license  to 
transact  the  business  of  life  or  casualty  insurance  under  the  pro- 
visions of  this  article,  provided  that  nothing  in  this  section  con- 
tained shall  modify  or  in  any  way  limit  subdivision  seven  of 
section  one  hundred  and  seven  of  this  chapter. 

Each  notice  of  assessment,  premium  or  periodical  call  made  by 
any  such  corporation,  association  or  society,  upon  its  members  or 
any  of  them,  shall  truly  state  the  cause  and  the  purpose  of  the  same, 
and  if  the  amount  j)aid  on  the  last  death  claim  paid  has  not  been 
paid  in  full  at  its  maximuiu  face  vnlvK\  llio  11:11110  of  \\\v  (!(^c'o:is(mI 
member,  and  the  maximum  face  value  of  the  certificate  or  policy, 
and  the  reason  why  not  paid  in  full. 

An  afiidavit  iiiado  by  the  (•iiiccr,  [>  )•>'-'.(':'■-■  •■  <  •■  .;''("•'•  •■.''  :•■  \-  <\]i  ■ 
corporation,  association  or  society,  having  charge  of  the  mailing  of 
such  notice,  that  such  notice  was  mailed,  stating  the  date  of  mail- 
ing, shall  be  presumptive  evidence  thereof. 

Source. — Former  §  210.,  as  amended  by  L.  1906,  chap.  326;  originally  revised 
from  L.  1883,  chap.  175,  §  17,  as  amended  by  L.  1887,  chap.  285. 

Amended  by  L.  1911,  chap.  636. 

Waiver  of  ail  rights  to  the  provisions  of  §§  205-210  is  not  in  accordance 
with  the  provisions  of  article  VI  of  the  Insurance  Law.  In  re  Ind.  Benefit 
Assn.,  Attorney-General  Rep.,  1892,  page  427. 

MORTALITY  ASSESSMENTS.— The  provision  of  chap.  321  of  1877  (now 
contained  in  §  92)  providing  that  before  a  forfeiture  of  a  life  policy  can  be 
declared  for  non-payment  of  premiums  or  interest,  notice  must  be  mailed 
to  the  holder,  stating  that  unless  the  premium  or  interest  due  was  paid 
within  thirty  days,  the  policy  would  be  forfeited,  does  not  apply  to  mortality 
assessments.    Merriman  v.  K.  M.  B.  Assn.,  138  N.  Y.,  116. 

Irregularities  on  the  part  of  the  association  does  not  relieve  members  of  the 
payment  of  assessments.    Ins.  Co.  v.  Belknap,  12  Chish.  (Mass.),  140. 

ULTRA  VIRES. —  An  association  is  not  bound  to  accept  a  candidate  for 
membership,  and  if,  in  so  doing,  it  imposes  conditi(ms  beyond  the  constitu- 
tional powers  given  it  by  its  constitution,  but  not  illegal,  and  these  condi 
tions  are  repudiated  by  the  other  party  to  the  contract,  there  is  no  acceptance 
thereof.  Palmer  v.  Commercial  Assn.,  53  Hun,  601;  25  St.  Rep.,  243;  6  N.  Y. 
Supp.,  870. 


340  The  Insurance  Law.  §  210. 

UNAUTHORIZED  POLICIES.— Co-operative  life  and  casualty  insurance 
companies  cannot  issue  policies  with  cash  surrender  value.  Attorney-Ceneral 
Kep.,  1893,  page  114. 

Assessment  insurance  companies  cannot  issue  policies,  the  premiums  of 
which  are  fixed  and  definite  and  payable  at  certain  times.  In  re  Chenango 
Mutual  Relief,  Attorney-General  Rep.,  1892,  page  416. 

Insurance  policies  written  by  co-operative  companies  must  be  for  a  fixed 
sum.  Preferred  Masonic  Mutual  Accident  Assn.,  Attorney  General  Rep.,  1892, 
page  400. 

Insurance  policies  written  by  co-operative  companies  must  be  for  a  fixed 
sum,  which  the  companies  and  their  members  are  bound  to  pay.  In  re  Mer- 
chants' Life  Assn.,  Attorney-General  Rep.,  1893,  page  118;  In  re  National 
Life  Assn.,  id.,  104;  In  re  Ind.  Ben.  Assn.,  id.,  194. 

Assessment  corporations  may  not  issue  policies  providing  for  the  payment 
of  fixed  annual  or  monthly  dues,  or  dues  for  any  period,  at  least,  without 
adding  the  further  condition  that  extra  dues  must  be  paid,  if  necessary, 
sufficient  to  meet  the  maximum  amount  in  a  single  policy.  Attorney-General 
Rep.,  Oct.  20,  1892. 

A  certificate  of  a  mutual  relief  society  cannot  provide  for  conditions,  which 
may  not  produce  enough  to  meet  the  maximum  amount  in  a  single  policy. 
Attorney-General  Rep.,  Dec.  13,  1892. 

Policies  or  certificates  of  insurance  issued  by  foreign  co-operative  insurance 
companies  should  contain  an  expressed  provision  authorizing  additional  assess- 
ments and  providing  for  additional  payments  in  case  the  sums  provided  for  in 
the  certificate  contract  become  inadequate  to  immediate  losses  by  death  or 
otherwise  as  they  may  accrue.  In  re  Springfield  Mut.  Life  Assn.,  Attorney- 
General  Rep.,  1896,  page  161. 

CONSTRUCTION  OF  POLICY.— Policies  of  insurance  are  ehoseS  in  action, 
and  are  governed  by  the  same  principles  applicable  to  other  agieements 
involving  pecuniary  obligations.  St.  John  v.  Am.  Mut.  Ins.  Co.,  13  N.  Y.,  31; 
Olmstead  v.  Keyes,  85  N.  Y.,  593. 

The  rule  that  an  insurance  contract  is  to  be  construed  most  strongly  against 
the  insurer  is  to  be  resorted  to  only  where  the  language  or  some  of  thn 
terms  of  the  contract,  after  the  use  of  such  helps  as  are  proper,  remain  of 
doubtful  import.     Foot  x.  Aetna  L.  Ins.  Co.,  61  N.  Y.,  575. 

The  contract  between  a  member  and  the  corporation  is  contained  in  the 
constitution  and  the  by-laws,  and  they  should  be  considered  together.  Poult- 
ney  v.  Bachman,  31  Hun,  49. 

The  constitution,  by-laws  and  the  context  of  the  certificate  of  membersliip 
in  a  mutual  benefit  association,  taken  together,  form  the  contract  between 
it  and  the  members,  and  by  it  the  rights  of  the  latter  must  be  determined 
Farmers'  Loan  &  T.  Co.  v.  Aberle,  18  Misc.,  257;  afl'd  19  App.  Div.,  79. 

The  rights  and  liabilities  of  the  parties  to  a  death  chiim  upon  the  funds 
of  an  insolvent  mutual  aid  association  in  the  hands  of  a  receiver  are  measured 
by  the  contract  created  by  the  constitution,  by-laws  and  certificate  of 
membership,  provided  the  same  were  authorized  by  law.  People  v.  Grand 
Lodge,  156  N.  Y.,  533;  aflf'g  88  Hun,  621. 

Provisions  of  the  constitution  and  by-laws  of  a  benevolent  society,  allowin-j 
benefits  "in  case  of  sickness,"  and  providing  that  "when  any  member  takes 
lick,"  he  shall  be  entitled  to  such  benefits  "  if  it  be  so  that  he  is  not  able  to 


§  210.   Life  ok  Casualty  Insurance  Cokporations.    341 

attend  to  his  daily  labor,"  do  not  extend  to  a  case  of  a  permanent  bodily 
injury  which  does  not  affect  the  general  health  of  the  person  injured.  Kelly 
V.  Ancient  Order  of  Hibernians,  9  Daly,  289. 

Where  the  constitution  provided  that  "  a  total  and  permanent  disability  to 
perform  or  direct  any  kind  of  labor  or  business,  or  upon  reaching  the  age 
of  seventy  years,  shall  entitle  a  member  holding  a  certificate  of  endowment 
so  disabled  or  aged  to  the  payment  of  one-half  of  the  endowment  to  which 
he  would  be  entitled  at  death,"  a  member,  who  accidentally  lost  all  the 
fingers  of  one  hand,  could  not  recover  the  one-half  as  it  was  not  a  total 
disability  within  the  constitution.  Hutchinson  v.  Supreme  Tent,  68  Hun,  355; 
52  St.  Kep.,  199;  22  N.  Y.  Supp.,  801. 

A  provision  in  a  certificate  of  membership  in  a  mutual  life  association, 
evidently  contemplating  a  mortuary  assessment  to  meet  each  death  loss,  wiM 
prevail  over  a  clause  of  the  by-laws  of  the  association  tending  to  limit  th^ 
number  and  amount  of  the  assessments  to  be  levied,  inconsistent  therewith, 
thougih  the  application  stipulates  that  the  by-laws  shall  be  part  of  the  con- 
tract; it  not  appearing  that  the  applicant's  attention  had  been  called  to  the 
clause.     Fitzgerald  v.  Equit.  R.  F.  L.  Assn.,  3  N.  Y.  Supp.,  214;  18  St.  Rep.,  914. 

STATUTE  OF  LIMITATIONS.— A  stipulation  creating  a  short  statute  of 
limitations  in  favor  of  the  insured,  within  which*  period  the  insurer  must 
test,  if  ever,  the  validity  of  the  policy,  is  not  void  as  against  public  policy. 
Wright  V.  Mut.  Ben.  Assn.,  43  Hun,  61;  aff'd  118  N.  Y.,  237. 

BENEFICIARY. —  In  case  the  insured  failed  to  designate  his  beneficiary, 
che  amount  payable  by  the  certificate  is  payable  to  the  legal  representatives 
of  the  member,  to  be  distributed  according  to  the  terms  of  the  contract;  the 
insured  has  a  vested  interest  in  the  certificate  of  which  no  one  can  divest 
him.     Simon  v.  O'Brien,  87  Hun,  160;  33  N.  Y.  Supp.,  815;  67  St.  Rep.,  460. 

Under  a  policy  on  the  Ufe  of  a  member,  his  family  was  designated  as  the 
beneficiary  thereof.  The  family  consisted  of  the  wife  and  one  daughter. 
The  daughter  afterwards  married  and  died.  Held,  that  the  wife  and  daughter 
were  the  beneficiaries,  because  they  constituted  the  family  of  the  deceased 
when  the  contract  was  consummated,  and  when  the  daughter  died  the 
mother  became  entitled  to  the  benefit  of  the  appointment  and  the  proceeds 
of  the  policy.     Brooklvn  Masonic  M.  R.  Assn.  v.  Hanson,  53  Ilun,  149. 

The  act  of  incorporation  of  an  association  after  declaring  that  one  of  its 
objects  was  to  assist  the  families  of  deceased  members,  authorized  it  to 
accumulate  a  fund  to  be  paid  over  to  the  families,  heirs  or  representatives 
of  deceased  memoers,  or  to  such  person  or  persons  as  such  deceased  members 
may,  while  living,  have  directed,  and  the  by-laws  provided  that  in  case  of 
failure  of  or  imperfect  designation,  then  the  amount  should  be  paid  to  the 
legal  heirs  of  the  deceased  member,  where  the  beneficiary  died  before  the 
member,  it  was  held  that  the  wife  of  the  member  was  included  in  the  words 
"  legal  heirs."    Walsh  v.  Walsh,  66  Hun,  297. 

The  words  "  legal  representatives "  ordinarily  mean  executors  or  adminis- 
trators, and  that  meaning  will  be  given  them  in  any  instance  unless  there 
be  facts  existing  showing  that  the  words  were  not  used  in  their  ordinary 
sense.     Sulz  v.  M.  R.  F.  L.  Assn.,  145  X.  Y.,  5G3;  rev'g  83  Hun.  139. 

^Vhere  the  charter  of  the  insurer  or  the  statute  under  which  it  was 
insured  does  not  forbid  the  insured  to  make  the  policy  payable  to  whomever 


342  The  Insurance  Law.  §  210. 

he  may  appoint,  and  there  is  no  evidence  tending  to  impeach  the  good  faith 
of  the  transaction,  a  policy  on  the  life  of  the  insured  made  payable  in  case 
of  death  to  another,  though  not  having  an  insurable  interest,  must  be  paid 
by  the  insurer.  Freeman  v.  Nat.  Ben.  Soc,  5  St.  Rep.,  82;  Fulmer  v.  Union 
Mut.  Assn.,  12  St.  Rep.,  347. 

In  a  certificate  of  membership  taken  our,  by  a  H.  M.  Case,  the  beneficiary 
was  named  as  "  Mrs.  H.  M.  Case  or  lawful  heirs."  Subsequently  the  wife  of 
the  member  dies  leaving  him  surviving  a  daughter  and  the  said  H.  M.  Case 
was  remarried.  Held,  that  the  daughter,  and  not  the  second  wife,  was 
.:?ntitled  to  the  benefits.    Day  v.  Case,  43  Hun,  179. 

Where  the  wife,  under  an  agreement  of  separation,  had  acquired  the  benefit 
certificate  issued  to  her  husband  upon  her  promise  to  pay  future  assessments, 
which  she  paid  with  the  knowledge  of  the  husband,  she  acquired  thereby  a 
vested  interest  in  the  certificate  of  which  her  husband  could  not  deprive  her. 
Conselyea  v.  Supreme  Council,  3  App.  Div.,  464. 

Where  the  right  of  a  member  of  a  benefit  society  to  designate  a  beneficiary 
is  unrestricted  at  the  time  when  a  certificate  of  insurance  was  issued  to  him, 
it  cannot  be  affected,  so  as  to  defeat  a  recovery  upon  the  certificate,  by 
by-laws  subsequently  enacted  by  th^  supreme  lodge  of  the  order  declaring, 
geneially,  that  the  beneficiary  must  be  a  member  or  members  of  his  family 
or  must  be  one  related  to  him  by  blood  or  a  person  who  shall  be  dependent 
upon  him.     Spencer  v.  Grand  Lodge,  22  Misc.,  147. 

Where  the  member  designated  as  beneficiaries  "  my  legal  heirs/  it  was 
held  that  the  word  "  heirs,"  as  it  is  generally  understood,  means  and  includes 
only  next  of  kin  or  relations  by  blood,  and  excludes  the  widow,  yet  it  may 
include  otner  than  blood  relations  where  the  intention  that  it  should  is 
shown.     Kaiser  v.  Kaiser,  13  Daly,  522;    I  St.  Rep.,  2.58. 

Where  the  company  agreed  to  pay  upon  the  death  of  a  member  the  sum 
specified  in  his  certificate  to  the  beneficiary  named,  and  to  the  surviving 
members  of  the  class  to  which  he  belonged,  "  share  and  share  alike,"  a  separate 
action  was  maintainable  against  the  company,  by  one  of  the  surviving  mem- 
bers of  the  class,  to  recover  his  proportionate  share  of  the  sum.  Emmeluth 
V.  H.  B   Assn.,  122  N.  Y.,  130. 

The  certificate  holder  has  the  right  to  name  a  beneficiary  and  is  not 
restricted  to  any  particular  class  or  relationship,  and  where  there  is  nothing 
in  the  by-laws  of  the  insurer,  or  in  the  certificate,  expressly  restricting  such 
.•ight,  the  insurer  had  the  power  to  issue  it,  and  it  is  valid  although  the 
oeneficiary  is  not  related  to  the  member.  Eckert  v.  Mut.  Relief  Soc,  2 
N.  Y.  Supp.,  612;   17  St.  Rep.,  877. 

LIABILITY  OF  COMPANY.— The  relations  between  the  company  and  its 
members  are  those  of  contractors,  the  contract  being  the  policy,  by  which 
the  liabilities  of  the  company  are  to  be  determined.  Hencken  v.  V.  S.  Life 
Ins.  Co.,  11  Daly,  289;  aff'd'98  N.  Y.,  627. 

Upon  the  compliance  by  the  applicant  with  the  requirements  of  the  rules 
and  regulations  of  the  society  they  are  called  upon  to  cause  an  assessment  to 
be  made  and  collected,  and  to  pay  to  the  party  entitled  thereto  the  money 
due;  the  applicant  is  under  no  obligation,  in  the  first  place,  to  compel  an 
aasessment.  O'Brien  v.  Home  Ben.  Soc,  61  Hun,  495;  21  St.  Rep.,  640; 
4  N.  Y.  Supp.,  275. 


§  210.   Life  ok  Casualty  Insurance  Corpobations.   343 

A  policy  wliieli  dot-s  Jiot  contain  a  .provision  obligating  the  association  to 
pay  or  the  nieinbeis  to  contribute  towards  paying  the  niaxiaium  amount  of 
the  policy,  or  agrees  that  in  the  event  that  the  amounts  are  insufficient,  the 
sum  raised  shall  be  divided  pro  rata  among  the  holders,  may  not  be  issued 
by  an  assessment  association.     Attorney-General  Rep.,  Jan.  25,  1893. 

Under  Article  VI,  a  policy  must  state  a  specific  sum  to  be  paid  and  an 
obligation  to  pay  the  maximum  amount  so  specified,  and  an  endorsement  on 
the  back  of  the  policy  which  provides  that  in  case  the  reserve  fund  is  impaired 
it  shall  be  ad'justed  by  at  assessment  in  addition  to  the  regular  mortuary 
call,  does  not  constitute  an  agreement  on  the  part  of  the  parties  that  an 
assessment  shall  be  made  sufficient  to  meet  all  contract  obligations.  Attor- 
ney-€!eneral    Rep.,   Feb.   3,    1893. 

The  certificate  of  an  industrial  benefit  association  must  provide  for  assess- 
ments sufficient  to  meet  the  maximum  amount  in  a  single  policy.  Attorney- 
General  Rep.,  May  5,  1893. 

A  policy  should  authorize  extra  assessments  by  clear  expression;  a  provision 
in  the  by-laws  or  charter  for  an  emergency  fund  and  its  restoration  within 
six  months  after  it  has  been  used  is  not  sufficient.  Attorney-General  Rep., 
March  26,  1897. 

An  action  may  be  maintained  on  a  policy  by  which  the  company  has  under- 
taken to  pay  a  fixed  sum  from  the  "  death  fund,"  or  from  moneys  realized 
to  such  fund  from  mortuary  assessments  on  all  the  members,  though  no 
such  assessment  has  been  made.  The  omission  of  the  company  to  make  it, 
where  it  is  shown  that  there  is  a  sufficient  number  of  members  to  yield  an 
assessment  sufficient  to  pay  the  claim,  creates  an  obligation,  the  same  as  if 
the  fund  were  on  hand  from  which  to  pay  the  amount  of  the  policy,  as,  in 
the  absence  of  proof  to  the  contrary,  it  will  be  presumed  that  the  assess- 
ment would  have  realized  the  full  amount.  Fitzgerald  v.  Equit.  R.  F.  L.  Assn., 
5  N.  Y    Supi".,  837. 

The  failure  of  an  insurance  association  to  assess  its  members  when  it  is 
bound  to  do  so  renders  it  liable;  the  member's  remedy  is  not  limited  to  an 
action  in  equity  to  compel  the  performance  of  that  duty.  Darrow  v.  Family 
Fund  Soc,  116  N.  Y.,  537. 

By  a  certificate  issued  by  the  defendant,  the  conditions  attached  thereto, 
and  its  by-laws,  it  agreed,  upon  the  death  of  the  member  holding  the  certifi- 
cate to  make  an  assessment  upon  its  members  and  pay  over  the  proceeds, 
not  exceeding  $2,000.  In  an  action  upon  the  certificate,  held,  that  upon 
refusal  to  make  an  assessment,  an  action  at  law  was  maintainable  for 
breach  of  the  contract;  that,  while  it  seems  an  equity  action  is  maintainable 
to  compel  defendant  to  make  and  collect  an  assessment  and  pay  over  the 
amount  stipulated,  plaintiff  was  not  limited  to  that  remedy.  O'Brien  v 
Home  Benefit  Soc,  117  N.  Y.,  310. 

A  mutual  assessment  company,  which  contracts  to  pay  death  claims  from 
assessments  among  its  members,  and  to  make  such  assessments  upon  the 
occurrence  of  a  death,  cannot  lie  by  and  omit  to  put  in  operation  the  means 
possessed  by  it  to  obtain  the  fund,  and  omit  payment  because  of  its  own 
neglect  of  duty;  this  would  be  to  take  advantage  of  its  own  wrong,  and  it 
would  operate  as  a  fraud  on  the  beneficiary  under  the  certificate.  Fitzgerald 
V.  Equitable  Res.  Fund  Assoc,  15  Daly,  229;  24  St.  Rep.,  493;  5  N.  Y^ 
Supp.,  873. 


344  The  Insueance  Law.  §  210. 

Where  the  association  has  in  its  hands  moneys  of  a  member  illegally 
exacted,  the  defense  of  forfeiture  for  non-payment  was  not  available  to  such 
association.    Knight  v.  Supreme  Council,  24  St.  Kep.,  845. 

BY-LAWS. —  Where  a  mutual  benefit  insurance  company  makes  a  by-la\» 
changing  the  contingency  on  which  a  specified  payment  is  to  be  made  so 
that  it  affects  a  vested  right  of  the  members,  such  by-law  is  unreasonable; 
and  the  company  has  no  power  to  make  it.  Weiler  v.  Equitable  Aid  Union 
92  Hun,  277;  36  N.  Y.  Supp.,  734;  71  St.  Rep.,  842. 

LIABILITY  OF  MEMBER.— The  liability  of  a  member  of  an  assessment 
insurance  company  to  pay  a  call  issued  by  the  receiver  of  such  a  company 
must  be  determined  by  the  contract  between  the  member  and  the  company 
Attorney -General  Rep.,  1897,  page  93. 

Members  are  liable  to  but  one  assessment  to  pay  each  death  claim;  it  is 
immaterial  as  to  whether  enough  was  realized  on  the  assessment  made  to 
pay  the  claim.    People  ex  rel.  Myers  v.  M.  G.  &  B.  Assn.,  126  N.  Y.,  615. 

The  neglect  of  a  member  to  pay  an  assessment  for  thirty  days  after 
notice  thereof  determines  the  membership  of  the  delinquent;  the  member  is 
liable  for  the  amount  of  all  assessments  previously  made,  and  also  for  all 
losses  happening  prior  to  the  time  when  he  ceased  to  be  a  member,  though 
no  assessment  therefor  had  been  made.    McDonald  v.  Ross-Lewin,  29  Hun,  87. 

Where  the  by-laws  of  an  assessment  accident  insurance  association  pro- 
vide :  "  Members  of  this  association  may  at  any  time  resign,  thereby  relin- 
quishing their  claims  upon,  or  privileges  under,  said  association;  provided 
however,  that  all  dues  and  assessments  shall  have  been  paid  to  the  dat< 
of  the  resignation."  A  member  of  the  association  who  terminates  his  mem- 
bership, whether  by  resignation  or  otherwise,  and  who  pays  all  premiums 
and  assessments  levied  upon  him  up  to  that  time,  is  not  liable  for  the 
amount  of  an  assessment  subsequently  levied  by  a  receiver  of  the  associa- 
tion, pursuant  to  an  order  of  the  court,  to  pay  claims  against  the  association 
which  accrued  during  his  membership.     Gray  v.  Daly,  40  App.  Div.,  41. 

SUICIDE  OF  MEMBER.— The  suicide  of  a  member  of  a  mutual  benefit 
association  does  not  come  within  the  meaning  of  the  provision  contained  in 
a  certificate  that  it  should  be  void  if  the  assured  should  die  "  in  the  violation 
of,  or  attempt  to  violate,  any  criminal  law."  Darrow  v.  Family  Fund  Soc, 
116  N.  Y.,  537;  Freeman  v.  Nat.  Benefit  Soc,  42  Hun,  252. 

FRAUDULENT  REPRESENTATION.—  In  an  action  brought  to  recover  an 
amount  alleged  to  be  due  under  a  mutual  benefit  assurance  certificate,  the 
insurance  company  may  show  that  the  member  made  false  representations 
upon  procuring  the  certificate,  which  representations  were  a  part  of  the 
contract.    Mayer  v.  Equit.  L.  Assn.,  42  Hun,  237. 

In  an  application  for  membership  the  applicant  stated  his  age  to  be  sixty 
years,  and  that  any  untrue  statement  therein  would  forfeit  the  applicant's 
right  to  any  benefits.  In  an  action  upon  the  certificate,  it  appeared  that  it 
was  the  custom  of  the  order  not  to  accept  as  member  one  over  sixty,  and 
that  the  applicant  was  at  least  sixty-one.  Held,  that  the  false  statement  was 
material,  and  that  the  action  was  not  maintainable.  Preuster  v.  Supreme 
Council,  136  N.  Y.,  417. 


§  210.   Life  or  Casualty  Insukance  Cokpokations.   3+5 

EVIDENCE. —  Where  the  question  of  membership  is  in  issue  any  evidenct 
tending  to  show  that  deceased  was  not  a  member  is  admissible.  Cramer  v. 
Masonic  Life  Assn.,  30  St.  Kep.,  609;  9  N.  Y.  Supp.,  356. 

BURDEN  OF  PKOOF. —  The  issue  to  a  person  by  an  assessment  life  insur- 
ance association  of  a  certificate  of  membership  therein  establishes  prima  facit 
the  fact  of  membership,  and  throws  upon  the  association  the  burden  ol 
proving  that  the  person  by  some  act  had  lost  such  standing;  such  a  certiticat« 
is  assignable  after  a  refusal  by  the  association  to  pay  the  loss.  Meagher  v. 
The  Life  Union,  65  Hun,  354. 

Where  the  policy  bound  the  company  to  maintain  a  death  fund,  which,  il 
depleted,  must  be  supplied  by  assessments,  to  be  levied  by  the  company,  the 
member  was  not  bound,  as  a  condition  of  recovery,  to  show  that  defendant 
had  in  the  death  fund  money  sufficient  to  pay  his  claim,  nor  that  an  assess 
ment,  if  levied,  would  have  produced  the  required  amount.  Cushman  v. 
Family  Fund  Soc,  36  St.  Rep.,  856;  13  N.  Y.  Supp.,  428. 

If  there  is  an  absolute  agreement  to  pay  assessments  in  a  member's  con- 
tract or  the  iby-laws,  a  receiver  may  collect  assessments  for  losses  susitained 
before  the  association  was  placed  in  charge  of  a  receiver;  contra,  if  no  such 
agreement  exists,  but  member  forfeits  all  rights,  Attorney-'General  Rep.,  Jan. 
19,  1897. 

A  foreign  mutual  life  association  can  only  be  permitted  to  transact  in  this 
state  such  kind  of  business  as  a  like  domestic  corporation  is  authorized  to  do 
and  may  not  issue  policies  which  provide  for  payment  in  advance  of  specific 
amounts,  but  do  not  contain  a  provision  requiring  additional  assessment  if 
the  exigencies  of  the  company  should  require.  Attorney-General  Rep.,  May  21, 
1896. 

A  scheme  by  which  the  purchaser  of  a  grave  stone  is  to  pay  for  the  same 
in  weekly  instalments  until  the  amount  agreed  upon  is  paid,  but  the  title 
of  the  stone  is  not  vested  in  the  purchaser's  estate  until  his  death,  and  if  d-eath 
occurs  prior  to  the  last  payment,  stone  shall  vest  in  his  estate,  clearly  falls 
within  the  definition  of  insurance.    Attorney-General  Rep.,  Oct.  17,  1903. 

Where  an  action  was  brought  on  a  certificate  issued  by  the  defendant  bj 
which  it  agreed  to  pay  to  the  beneficiary  "all  the  amount  realized  from  one 
assessment,  not  exceeding  $2,000,"  the  burden  of  proving  that  the  amount 
which  would  be  raised  by  one  assessment  exceeded  $2,000  rested  on  the 
plaintiff,  and  that,  in  the  absence  of  evidence  to  that  effect,  there  was  no 
presumption  that  it  would  equal  that  amoimt.  O'Brien  v.  Home  Ben,  Soc., 
46  Hun,  426. 

NOTICE  NOT  GIVEN. —  The  suspension  of  a  member  of  a  benevolent  society 
under  a  provision  of  its  constitution  providing  for  the  suspension  of  a 
member  failing  to  pay  an  assessment  levied  by  the  society  within  forty 
days  after  the  date  of  the  notice  of  the  assessment,  is  illegal,  where  the 
notice  has  not  been  served  upon  the  member.  People  ex  rel.  Crowley  v. 
Supreme  Council,  23  Abb.  N.  C,  323. 

Where  the  constitution  of  a  mutual  benefit  association  provides  that  when 
an  assessment  is  made  the  secretary  shall  at  once  notify  the  members,  and 
each  member  shall  pay  the  same  within  thirty  days  from  the  date  of  the 
notice,  under  penalty  of  forfeiture,  the  omission  to  pay  an  assessment  levied 
thirty-four  days  before  the  member's  death  is  no  cause  for  forfeiture  when 


346  The  Insukance  Law.  §  210. 

the  notice  was  not  given  until  thirteen  days  after  levy  of  the  assessment. 
Knight  V.  Supreme  Council,  6  N.  Y.  Supp.,  427. 

Under  a  by-law  providing  for  the  dropping  of  a  member  in  case  of  a 
neglect  to  pay  dues  for  a  certain  time  after  receiving  notice  oi  his  indebted- 
ness, the  society  has  no  right  to  drop  a  member,  unless  he  has  received  such 
notice;  mere  proof  that  such  notice  was  mailed  to  him  properly  addressed 
is  not  sufficient  to  authorize  such  action,  especially  where  it  is  shown  that  he 
was  absent  from  home  at  the  time.  People  ex  rel.  McQuien  v.  Theatrical 
A8sn.,  29  St.  Kep.,  405;  8  N.  Y.  Supp.,  675. 

A  failure  to  conform  to  the  statutory  provision  with  regard  to  notice  will 
prevent  an  association  from  declaring  a  forfeiture  of  a  policy  for  non-payment 
of  assessments.     Warner  v.  Association,  100  Mich.,  157. 

INSUFFICIENT  NOTICE.—  Where  one  of  the  rules  of  a  company  provides 
that  "  a  notice  shall  be  sent  announcing  each  assessment  and  the  number 
thereof  to  the  last  post-office  address  given  to  the  association  by  each  mem- 
ber," a  forfeiture  cannot  be  based  upon  a  notice  which  omits  the  number 
of  the  assessment.    Greenwald  v.  United  Life  Ins.  Co.,  18  Misc.,  91. 

WAIVER  OF  PROOFS.—  Refusal  of  an  insurance  society  to  furnish  blanks 
for  proof  of  death,  upon  application  therefor  by  the  beneficiary,  upon  the 
ground  that  the  deceased  had  forfeited  his  membership  by  failure  to  pay 
an  assessment,  is  a  waiver  of  proof  and  notice  of  death.  Payn  v.  Mut.  Relief 
Soc,  17  Abb.  N.  C.  53. 

Where  a  corporation,  after  verbal  notice  of  an  injury  to  the  insured,  sent 
one  of  its  medical  directors  to  examine  the  condition  of  the  wound,  it  must 
be  deemed  to  have  waived  a  condition  of  the  certificate  requiring  written 
notice  to  it  of  such  injury.  Martin  v.  Equit.  Ace.  Assn.,  61  Hun,  167;  41 
St.  Rep.,  77;   16  N.  Y.  Supp.,  279. 

WAIVER  OF  FORFEITURE.—  In  the  absence  of  any  agreement,  a  waiver  of 
forfeiture  of  a  policy  of  life  insurance  results  only  from  negotiations  or 
transactions  with  the  insured,  by  which  the  insurer  after  knowledge  of  the 
forfeiture  recognizes  the  continued  existence  of  the  policy,  or  does  some 
acts  based  thereon,  or  requires  the  insured  by  virtue  thereof  to  do  some 
act  or  inciu"  some  expense  or  trouble.  Ronald  v.  M.  R.  F.  L.  Assn.,  132 
N.  Y.,  378. 

A  forfeiture  cannot  be  based  upon  an  assessment  or  mortuary  premium 
call,  of  which  notice  is  sent  before,  but  which  is  not  payable  until  after 
the  death  of  the  insured;  a  forfeiture  for  non-payment  is  waived  by  the 
making  of  subsequent  mortuary  calls  upon  the  person  so  in  default.  Elmer 
v.  Mut.  Ben.  Assn.,  47  N.  Y.  St.  Rep.,  35;  19  N.  Y.  Supp.,  289. 

The  secretary  of  a  benevolent  society,  although  not  authorized  by  its  con- 
stitution or  by-laws  to  accept  payment  of  dues  from  members,  habitually 
received  such  dues,  which  he  paid  over  to  the  society.  Held,  that  the  society 
was  thereby  estopped  to  deny  his  authority  to  accept  dues  tendered  by  ^ 
member,  but  refused  by  him  on  the  ground  of  want  of  authority;  and  that 
such  tender  was  legally  equivalent  to  payment,  so  as  to  render  the  society 
liable  for  the  benefit  payable  on  the  death  of  such  member,  as  a  membei 
"  clear  on  the  books "  under  its  by-laws,  he  having  died  before  any  subse- 
quent meeting  of  the  society  or  its  directors  at  which  the  dues  might  prop- 
erly have  been  paid.  Reeding  v.  Sons  of  Moses,  16  Daly,  417;  7  St.  Rep.,  13; 
11  N.  Y.  Supp.,  750. 


§  210.       Life  or  Casualty  Insukance  (Corporations.       347 

Any  agreement,  declaration  or  course  of  action  on  the  part  of  the  insur- 
ance company  which  leads  the  party  insured  honestly  to  believe  that  by 
conforming  to  it  a  forfeiture  of  Ins  policy  will  not  be  incurred,  followed  by 
due  conformity  upon  his  part,  will  estop  the  insurance  company  from  insist- 
ing upon  the  forfeiture,  although  such  forfeiture  might  be  claimed  under 
the  express  letter  of  the  contract.  Van  Bokkelen  v.  Mass.  Ben.  Assn.,  9U 
Hun,  330. 

Where  an  assessment  company  received  assessments  from  a  member  after 
the  same  were  due,  and  by  a  course  of  such  dealing  established  in  the  mind 
of  the  member  a  belief  that  it  would  continue  to  receive  his  assessments 
in  this  manner,  his  claim  will  not  be  cut  off  absolutely  by  the  fact  that  he 
is  in  arrears,  under  a  strict  construction  of  the  by-laws,  at  the  time  of  his 
death.  King  v.  Masonic  L.  Assn.,  87  Hun,  591;  34  N.  Y.  Supp.,  563; 
68  St.  Kep.,  520. 

A  certificate  of  benefit  insurance,  which  has  lapsed  by  default  in  payment 
of  dues,  is  not  reinstated  by  the  payment  of  the  dues  to  a  receipting  clerk 
who  has  no  power  to  make  a  fresh  contract,  and  who  delivers  a  receipt 
expressed  to  be  on  condition  that  the  insured  is  in  good  health,  as  originally, 
etc.,  this  not  being  the  fact,  even  though  the  person  making  the  payment 
does  not  read  the  receipt;  the  fact  that  the  association  asked  for  proofs 
of  death,  and  gave  instruction  in  connection  therewith,  is  not  a  waiver  ol 
the  forfeiture.    Ronald  v.  Mut  Res.  F.  Assn.,  23  Abb.  N.  C,  271. 

Upon  the  trial  of  an  action,  brought  to  recover  the  amount  of  two  life 
insurance  policies  issued  by  a  mutual  benefit  association,  it  was  shown  that 
the  insurer  did  not  intend  to  terminate  the  policies  by  reason  of  the  failure 
of  the  insured  to  pay  a  certain  assessment  levied  thereon,  provided  such 
assessment  was  subsequently  paid,  and  the  insurer,  by  a  notice  to  the 
insured,  stated  that  the  policies  might  be  renewed  "  by  immediate  payment, 
if  the  risk  is  approved  by  the  association  upon  receipt  of  said  payment  at  the 
home  office."  Immediate  payment  was  made  at  the  home  office,  the  risk  was 
approved  by  the  insurer  and  the  policies  were  renewed  by  it.  Held,  that  the 
insurer  expressly  waived  its  right  to  insist  that  the  policies  were  forfeited 
and  was  estopped  from  asserting  that  they  were  not  in  full  force  at  the  time 
of  the  death  of  the  insured.    Sieburg  v.  Mass.  Ben.  Assn.,  87  Hun,  199. 

If  a  promise  is  made  by  the  wife  of  the  financial  secretary,  who  is  acting 
for  him,  to  extend  the  time  for  payment  of  an  assessment,  the  certificate  will 
not  lapse  if  the  financial  secretary  was  authorized  to  extend  the  time  of 
payment.     Teckmeyer  v.  Supreme  Council,  4  App.  Div.,  537. 

The  provisions  of  a  policy  requiring  a  prompt  payment  of  the  stipulated 
periodical  payments  is  a  condition  precedent,  but  such  prompt  payment  may 
be  waived  by  the  insurer,  and  in  such  case  the  contract  remains  in  full  force. 
Baker  v.  N.  Y.  Mut.  Ben.  Asso.,  27  Wk.  Dig.,  91;  aff'd  112  N.  Y.,  672. 

Evidence  that  during  a  period  of  a  year  from  the  time  of  the  organization 
of  a  subordinate  lodge  of  an  assessment  insurance  association  twenty-three 
assessments  had  been  levied  on  the  lodge,  which,  with  three  or  four  excep- 
tions, had  been  paid  after  they  became  overdue,  without  complaint  on  the 
part  of  the  supreme  lodge,  is  sufficient  to  justify  a  jury  in  finding  that  the 
officers  of  the  supreme  lodge  waived  prompt  payment,  and  that  they  were 
estopped  from  summarily  suspending  the  subordinate  lodge,  in  pursuance  of 
a  by-law  of  the  association,  for  failing  to  pay  the  twenty-fourth  assessment 


348  The  Insurance  Law.  §  210. 

until  seven  days  after  it  became  due.     McClure  v.  Supreme  Lodge,  41  App. 
Div.,  131. 

While  the  unconditional  receipt  by  a  mutual  benefit  association  of  an 
assessment  from  one  of  its  members  after  the  time  had  expired  for  its 
payment,  may  constitute  a  waiver  of  the  default  of  such  member  and  operate 
to  reinstate  him  in  its  membership,  the  receipt  thereof  by  an  officer  of  such 
association  with  qualified  power  will  not,  in  the  face  of  a  provision  in  its 
constitution  that  he  should  not  receive  such  assessment,  except  where  it  is 
tendered  in  an  open  meeting  of  the  association,  have  that  eflFect,  unless 
the  payment  to  him  is  in  some  manner  ratified  by  the  association.  McGowan 
v.  Cath.  Mut.  Ben.  Assn.,  76  Hun,  534. 

FORFEITURE  NOT  WAIVED.—  If  the  certificate  of  membership  has 
lapsed  through  the  member's  default,  it  is  not  revived  by  the  conditional 
acceptance  of  dues,  unless  the  condition  be  performed.  May  v.  N.  Y.  Safety 
Fund  Soc,  13  N.  Y.  St.  Rep.,  66. 

After  the  death  of  a  person  to  whom  a  policy  of  life  insurance  had  been 
issued,  proofs  of  death  were  furnished  to  the  insurance  company,  and  the 
latter  advised  the  administrator  that  upon  the  facts  as  they  then  appeared 
the  proofs  were  approved  and  the  claim  would  be  paid  on  a  specified  day,  a 
mortuary  call  was  made  by  the  insurer,  assessing  its  members  for  approved 
claims,  among  which  was  the  claim  upon  the  policy  of  decedent,  and  the 
money  was  collected,  but  the  corporation  did  not  pay  the  amount  of  the 
policy  in  accordance  with  its  notice,  and  notified  the  administrator  of  revo- 
cation of  approval  of  the  claim.  Held,  that  a  defense  to  the  action  brought  on 
the  policy,  based  upon  facts  unknown  to  the  insurer  at  the  time  of  such 
notice  and  assessment,  had  not  been  waived  by  it.  Stuart  v.  Mut.  Res.  Fund 
Assn.,  78  Hun,  191. 

The  certificate  of  a  benefit  society  provided  that  a  failure  to  pay  dues  over 
four  weeks  would  avoid  the  policy,  and  also  that  collectors  were  not  authorized 
to  waive  forfeiture  on  receive  payment  beyond  such  time.  At  the  time  of 
the  death  of  the  insured  the  dues  on  the  certificate  were  four  weeks  in 
arrears,  and  thereafter  plaintiff  paid  them  to  a  collector,  but  the  company 
refused  to  receive  them.  Held,  that  the  failure  within  the  time  limited 
caused  a  lapse  or  forfeiture  of  the  certificate,  and  that  the  payment  to  the 
collector  did  not  revive  it.  Jackson  v.  Royal  Benefit  Soc,  15  Misc.,  481; 
37  N.  Y.  Supp.,  28;  72  N.  Y.  St.  Rep.,  179. 

Relator,  who  was  a  member  of  the  defendant  association,  failed  to  pay 
his  annual  dues  at  the  time  fixed  therefor,  although  he  had  been  given 
two  months'  notice  thereof.  Subsequently,  in  response  to  an  inquiry  as  to 
whether  the  moneys  had  been  sent  and  notice  that  if  not  a  reinstatement 
would  be  necessary,  he  sent  a  check  for  the  amount,  which  was  deposited 
in  the  suspense  account.  About  the  same  time  he  received  a  mortuary  call, 
which  stated  that  neither  such  notice  or  the  acceptance  of  the  money  would 
be  held  to  waive  any  forfeiture  by  reason  of  non-payment  of  any  previous 
sum  when  due.  The  amount  of  this  call  was  sent  and  placed  in  the  suspense 
account.  Relator  subsequently  refused  to  sign  an  application  for  reinstate- 
ment, and  the  association  tendered  back  the  moneys  so  received  by  it.  Held, 
that  there  was  no  waiver  of  the  forfeiture  on  the  part  of  the  association. 
IVople  v.  Mut,  Res.  Assn.,  15  Misc.,  333;  .37  N.  Y.  Supp.,  617. 


§  211.        Life  ok  (Lysualty  Insii.'a.nm  i.   ( 'oi.m'okations.        849 

REINSTATEMENT. —  A  certificate  contained  a  clause  which  required  the 
members  to  pay  an  assessment  withiin  thirty  days  after  notice,  and  pro- 
viding that  if  not  paid  within  such  time  the  policy  would  lapse,  but  that  he 
may  be  reinstated  for  valid  reasons.  The  member  was  stricken  with 
apoplexy  shortly  after  the  termiination  of  a  thirty-day  notice,  ^rom  which 
>?troke  he  subsequently  died,  keld,  that  the  question  whether  it  was  a 
zalid  reason  should  have  been  submitted  to  the  jury.  Dennis  v.  Mass,  Ben, 
Assn,,  47  Hun,  338, 

An  insane  person  cannot  be  deemed  to  be  in  good  health  within  the  mean- 
ing of  an  insurance  policy,  where  a  member  after  paying  the  assessments 
levied  upon  him  for  a  period  of  twenty- two  years  becomes  insane,  and  while 
IT)  that  condition,  which  continues  until  his  death,  omits  to  pay  an  assess- 
ment, notice  of  which  is  served  upon  him  by  mail,  and  the  beneficiary  of  the 
certificate,  some  six  months  thereafter,  immediately  upon  learning  of  the 
'i.^fault  in  the  payment  of  the  assessment,  notifies  the  association  of  the 
riomber's  condition  and  offers  to  pay  the  assessment,  the  beneficiary  is  entitled 
to  recover  upon  the  certificate,  although  the  company  has  declined  to  rem 
state  the  insured,  stating  as  the  ground  therefor  that  he  was  over  fifty-five 
years  of  age.    McNeil  v.  Southern  T.  M.  R.  Assn.,  40  App.  Div.,  581. 

EXCUSE  FOR  NON -PERFORMANCE.— The  non-payment  of  the  premium 
secured  to  be  paid  by  a  life  policy  on  the  day  on  which  it  falls  due  will  avoid 
the  policy  if  by  the  terms  of  the  policy  it  is  so  agreed;  neither  sudden  illness 
nor  insanity  will  excuse  the  performance  of  the  exact  requirements  of  the 
contract.     Ingram  v.  Supreme  Council,  14  N.  Y.  St.  Rep.,  600. 

FORFEITURE.  —  The  forfeiture  of  a  policy  of  insurance  by  a  mutual 
insurance  company  does  not  discharge  the  party  whose  property  was  thereby 
insured  from  his  liability  to  pay  the  assessments  already  made  upon  his  pre- 
mium note,  executed  to  the  company  in  consideration  of  such  policy.  The 
Iowa  State  Ins.  Co.  v.  Prossee,  11  Iowa,  115. 

The  member  is  not  necessarily  released  from  liability  to  assessment  by  for- 
feiture of  rights  under  the  policy.  Korn  v.  Ins.  Co.,  6  Crauch,  192;  Ins.  Co.  v. 
Underwood,  3  Gray  (Mass.),  210. 

§  211.    Change  of  beneficiary. 

Membership  in  any  such  corporation,  association  or  society  shall 
give  to  any  member  thereof  the  right,  at  any  time,  with  the  consent 
of  such  corporation,  association,  or  society,  to  make  a  change  in  his 
payee  or  payees  or  beneficiary  or  beneficiaries  without  requiring 
the  consent  of  such  payee  or  beneficiaries. 

Source. — Former  §  211;  originally  revised  from  L.   1883,  chap.  175,   §  18. 

RIGHT  TO  CHANGE  BENEFICIARY.— A  member  of  a  mutual  benefit 
insurance  association  has  the  right  at  any  time  to  change  the  beneficiary 
named  in  his  certificate,  by  complj'ing  with  the  rules  and  by-laws  of  the 
association.     Fleeman  v.  Fleeman,  39  N.  Y.  St.  Rep.,  307;  15  N.  Y.  Supp.,  838. 

A  recital  in  an  indorsement  made  by  the  secretary  on  a  certificate  that, 
at  the  written  request  of  the  holder  of  the  certificate,  the  beneficiary  was 
changed  from  his  brother  to  his  wife,  is  sufficient  evidence  of  a  compliance 
with  the  by-laws  of  the  association  which  provide  that  a  change  of   bene- 


350  The  Insurance  Law.  §  211. 

ficiary  may  be  made  on  the  written  order  of  the  holder  of  the  certificate; 
signed  in  the  presence  of  two  witnesses.  Gladding  v.  Gladding,  29  N.  Y.  St. 
Rep.,  485;  8  N.  Y.  Supp.,  880. 

The  consent  of  the  company  to  a  change  of  beneficiaries  is  indispensably 
necessary.     Newman  v.  John  Hancock  M.  L.  Ins.  Co.,  45  Misc.,  320. 

A  certificate  issued  to  a  member,  then  unmarried,  was  made  payable  to 
his  daughter.  The  member  was  subsequently  married  and  inserted  in  the 
certificate  the  name  of  his  wife  after  the  name  of  his  daughter.  The  inser- 
tion was  made  without  the  knowledge  of  the  company.  It  was  held  that 
there  was  no  valid  change  in  the  beneficiary  named  in  the  application  and 
that  the  daughter  was  entitled  to  the  entire  fund.  Thomas  v.  Thomas,  13 1 
N.  Y.,  205. 

When  the  certificate  of  membership  and  the  rules  and  regulations  of  a 
membership  life  insurance  association  provide  that  a  member  may  change 
his  beneficiary  "as  often  as  desired,  consent  of  the  existing  beneficiaries  not 
being  required,"  etc.,  a  beneficiary  first  named,  and  who  refuses  to  surrender 
the  policy  intrusted  to  her,  acquires  no  vested  rights  which  prevent  a  cliange 
of  beneficiary  by  the  member  on  his  complying  with  the  provisions  of  the 
association  in  that  respect.  Martha  Stronge  v.  The  Supreme  Lodge,  Knights 
of  Pythias,  111  App.  Div.,  87. 

When  one  insured  in  a  membership  corporation  having  under  the  by-laws 
a  right  to  change  his  beneficiary  by  designating  the  change  desired,  which 
shall  be  "  duly  recorded  and  endorsed  "  on  his  certificate,  has  duly  requested, 
after  the  death  of  his  wife,  the  first  beneficiary,  that  the  beneficiary  should 
be  "  as  provided  in  my  will,"  which  change  was  endorsed  on  the  certificate 
by  the  company  and  recorded  in  its  books,  the  trustee  of  the  residuary 
estate  of  the  insured  is  entitled  to  recover  the  amount  due.  The  Brooklyn 
Trust  Co.  V.  Seventh  Hegiment  Veteran  and  Active  League,  113  App.  Div.,  717. 

The  beneficiary  under  a  policy  issued  by  a  casualty  company,  doing  business 
under  article  2  of  the  Insurance  Law,  and  which  contains  no  provision  permit- 
ting the  insured  to  change  the  beneficiary  named,  has  a  vested  interest  in  the 
policy  and  not  a  mere  expectancy  or  inchoate  right.  Dunn  v.  Amsterdam 
Casualty  Co.,  67  Misc.,  109. 

INTEREST  OF  BENEFICIARY.— The  beneficiary  named  in  a  certificate 
has  an  assignable  interest  therein,  though  the  insured  has  power  to  change, 
the  beneficiary;  in  an  action  against  a  life  associatfon  to  recover  the  amount 
of  a  policy  assigned  by  a  beneficiary  to  plaintiflf  the  assignor  is  not  a 
necessary  party  merely  because  the  assignment  was  made  to  secure  a  loaii 
from  the  assignee  to  the  insured  of  a  less  sum  than  the  amount  of  the 
policy.  Lawler  v.  Nat.  L.  Assn.,  83  Hun,  393;  31  N.  Y.  Supp.,  875;  64  N.  Y. 
St.  Rep.,  785. 

Where  the  designation  of  the  beneficiary  is  voluntary  in  the  nature  of  a 
gift,  the  courts  will  require  strict  compli.ince  with  the  rules  as  to  change  of 
beneficiary;  not  so,  however,  where  there  is  a  consideration  for  the  transfer 
and  a  vested  interest  in  the  fund.    Tidd  v.  Mclntyre,  116  App.  Div.,  602. 

A  person  designated  as  beneficiary  of  a  policy  issued  by  a  benefit  society, 
who  voluntarily  and  gratuitously  pays  the  assessments  thereon,  and  not 
under  any  contract  with  the  insured,  acquires  no  vested  interest  therein 
as  against  a  person  afterwards  named  beneficiary  by  the  insured.  Nix  v. 
Donovan,  46  N.  Y.  St.  Rep.,  21;  18  N.  Y.  Supp.,  435. 


§  212.   Life  or  Casualty  Insurance  Corporations.   351 

Plaintiff  was  designated  by  her  son  as  beneficiary  of  a  certificate  issued 
by  the  defendant,  a  mutual  benefit  association,  to  such  son.  Thereafter, 
without  plaintiff's  knowledge,  her  son  surrendered  the  certificate  to  defendant, 
and  received  in  place  of  it  another  certificate  designating  his  wife  as  the 
beneficiary.  Held,  that  defendant  was  not  bound  to  pay  to  plaintiff  the 
sum  mentioned  in  the  certificate,  and  that  the  certificate  was  not  operative 
as  a  contract  and  that  the  power  to  designate  was  not  lost  by  one  designa- 
tion.    Deady  v.  Bank  Clerks'  Assn.,  17  J.  &  S.,  246. 

A  beneficiary  who  has  neglected  to  obtain  the  consent  of  the  insurance 
company  to  his  substitution  as  the  beneficiary  under  a  policy,  cannot  main-^ 
tain  an  action  against  the  insurance  company  to  recover  the  amount  thereof. 
Newman  v.  John  Hancock  Mut.  L.  Ins.  Co.,  45  Misc.,  320. 

A.  by-law  of  a  mutual  benefit  insurance  society,  providing  that  the  bene- 
ficiary named  in  a  certificate  of  membership  shall  only  be  changed  upon  the 
return  of  the  original  certificate,  is  intended  only  for  the  convenience  of 
the  society  and  may  be  waived  by  it;  the  original  beneficiary  is  entitled 
t.f  repayment  out  of  the  fund  realized  on  the  certificate  at  the  death  of  the 
insured  of  assessments  paid  by  her  in  ignorance  of  the  fact  that  a  new 
beneficiary  had  been  designated.  Southern  T.  M.  R.  Assn.  v.  Laudenbach,  5 
N.  Y.  Supp.,  901. 

Where  a  wife  who  was  named  as  beneficiary  died  before  the  insured,  and 
be  subsequently  married  again,  on  his  death  the  widow  is  entitled  to  the 
fundc  where  there  was  no  subsequent  designation.  Matter  of  Rock,  49 
Misc.,  286. 

CAPACITY. —  In  an  action  to  set  aside  an  instrument  revoking  the  appoint- 
ment of  plaintiff  as  beneficiary  under  a  life  insurance  policy  and  appointing 
defendant  instead,  on  the  ground  of  deceased's  mental  incapacity  to  make  the 
same,  where  the  attending  physician  testified  against  her  capacity,  and  two  old 
acquaintances  testified  that  deceased  was  unable  at  the  time  to  recognize 
them,  the  question  of  capacity  was  for  the  jury,  and  it  was  error  to  direct 
a  verdict  for  defendant.  Henken  v.  Monaghan,  49  N.  Y.  St.  Rep.,  358;  21  N.  Y. 
Bupp.,  235. 

SURRENDER  OF  CERTIFICATE.—  Where  the  first  certificate  has  not  beer 
received  until  after  the  member's  death  the  society  has  no  right  to  issue 
a  new  certificate,  as  the  attempted  surrender  was  incomplete  and  no  rights 
were  conferred  thereby.    Luhrs  v.  Luhrs,  6  N.  Y.  Supp.,  51. 

The  "  immediate  family "  of  a  member  is  to  be  determined  at  his  death, 
and  not  at  the  beginning  of  his  membership.  Davin  v.  Davin,  114  App. 
Div.,  396. 

Where  a  widow  is  entitled  to  the  death  benefit,  provided  she  did  not  for 
any  reason  live  separated  from  the  deceased  member,  and  provided  she  took 
care  of  him  during  his  last  illness,  the  widow's  action  to  recover  should  be 
dismissed  where  evidence  shows  that  she  had  been  separated  from  her 
husband  for  years,  and  was  at  the  time  of  his  death.  Zajic  v.  Elian,  50 
Misc.,  289. 

§  212.    Exemption  from  execution. 

The  money  or  other  benefit,  charity,  relief  or  aid,  paid  or  to  be 
paid,  provided  or  rendered  by  any  such  corporation,  association  or 


352  The  Insitkance  Law.  §  213. 

society  shall  not  be  liable  to  be  seized,  taken  or  appropriated  by 
any  legal  or  equitable  process,  to  pay  any  debt  or  liability  of  a  mem- 
ber, or  any  debt  or  liability  of  the  widow  of  a  deceased  member  of 
such  corporation  designated  as  the  beneficiary  thereof,  which  was 
incurred  before  such  money  was  paid  to  her  or  such  benefit,  charity, 
relief  or  aid  was  provided  or  rendered. 

Source. — Former  §  212,  as  amended  by  L.  1897,  chap.  345;  originally  revised 
^rom  L.  1883,  chap.  175,  §  19;  L.  1884,  chap.  16. 

LBGIStLATIVE  INTENT.— The  legislative  intent  in  the  enactment  of 
§§  212  and  238  of  the  Insurance  Law,  to  place  co-operative  and  as'sessment 
insurance  in  a  class  by  itself,  was  to  relieve  such  insurance  from  the  opera- 
tion of  §  52  of  the  Domestic  Relations  Law,  making  insurance  money  realized 
by  a  wife  on  the  life  of  lier  husband  subject  to  his  debts,  where  the  annual 
premium  paid  out  of  his  property  exceeds  $500.  Dominick  v.  Stern,  79 
Alisc,  271. 

EXECUTION.— The  provisions  of  §  212  of  the  Insurance  Law  apply  to 
all  corporations,  whether  incorporated  under  article  VI  of  the  Insurance 
Law  or  not,  and  moneys  cannot  be  reached  by  a  judgment-debtor  of  a 
widow  receiving  such  moneys  as  beneficiary.  People's  Bank  of  Buffalo  v. 
Cushman,  109  App.  Div.,  349. 

§  ^13.    Penalties. 

Any  officer  or  agent  of  any  such  corporation,  association  or  so- 
ciety, subject  to  any  of  the  provisions  of  this  chapter,  who  shall 
neglect  or  refuse  to  comply  with  any  such  provision,  or  who  shall 
make  in  any  report  or  statement  any  intentionally  false  or  fraudu- 
lent statement ;  or  shall  refuse  to  permit  the  superintendent  of  in- 
surance or  any  examiner  duly  authorized  by  him  for  the  purpose, 
to  make  an  examination  of  its  conditions  and  business,  books, 
papers  and  vouchers;  and  any  person  who  shall  act  within  this 
state  as  agent,  solicitor  or  collector  for  any  such  corporation,  as- 
sociation or  society,  which  shall  have  failed,  neglected  or  refused 
to  comply  with  or  violated  any  of  the  provisions  of  this  chapter, 
or  shall  have  failed  or  neglected  to  procure  from  the  superintendent 
the  certificate  of  authority  to  transact  business  in  this  state  re- 
quired by  law,  shall  forfeit  to  the  people  of  the  state  the  sum  of 
one  hundred  dollars  for  every  such  offense.  If  an  examination  of 
the  condition  and  business  of  any  such  corporation,  association  or 
society  transacting  business  in  this  state  shall  be  prevented  by 
such  refusal,  the  superintendent  of  insurance  shall  revoke  the  cer- 
tificate of  authority  issued   to   such  corporation,   association  or 


§  214.       Life  ob  Casualty  Insurance  Corporations.       353 

society ;  and  it  shall  thereafter  be  unlawful  for  it  to  do  business  in 
this  state  until  it  shall  have  submitted  to  an  examination,  and  the 
superintendent  shall  have  issued  to  it  a  new  certificate  of  author- 
ity authorizing  it  to  continue  business  in  this  state.  . 

Source.-HFormer  §  213;   originally  revised  from  L.  1883,  chap.  175,  §  20,  as 
amended  by  L.  1889,  chap.  184. 

See    §    1197,   'Penal   Law.       Failure    to   file   report    with    superintendent    a 
misdemeanor. 

§  214.  Exemption  of  certain  societies  and  subordinate 
lodges  of  Odd  Fellows  and  Masons  from  the  provisions  of  this 
article. 

'No  society  or  subordinate  lodge  or  body  of  any  secret,  fraternal 
or  industrial  society  now  organized  in  this  state  paying  only  sick 
benefits,  not  exceeding  two  hundred  and  fifty  dollars  in  the  aggre- 
gate to  any  one  person  in  any  one  year,  or  a  funeral  benefit  or  relief 
to  those  dependent  on  a  member  not  exceeding  three  hundred  and 
fifty  dollars,  shail  be  required  to  make  any  report  thereof  under 
tliis  article.  Subordinate  lodges  or  councils  or  other  bodies  by 
whatsoever  name  known,  of  fraternal,  secret  or  industrial  societies 
shall  not  be  required  to  make  an  annual  report  to  the  superintend- 
ent of  insurance,  when  the  money,  charity,  relief  or  aid  is  payable 
by  the  grand  or  supreme  body  of  the  same,  and  is  derived  from 
assessments  upon  such  subordinates  or  their  members,  but  such 
report  shall  be  made  and  filed  by  such  grand  or  supreme  body. 
This  article  shall  not  prevent  the  creation  of  a  reserve  fund  by  any 
corporation,  association  or  society  transacting  the  business  of  life  or 
casualty  insurance,  or  both,  upon  the  cooperative  or  assessment 
plan,  where  its  funds  or  its  accretions,  or  both  are  to  be  used  for  the 
payment  of  assessments  or  death  losses,  or  for  benefits  in  case  of 
physical  disability  only.  This  article  shall  not  apply  to  the  grand 
or  subordinate  lodges  of  the  Independent  Order  of  Odd  Fellows  as 
they  now  exist,  or  to  any  grand  or  subordinate  lodge  of  Free  and 
Accepted  Masons,  nor  to  any  association  or  organization  of  the  vet- 
eran firemen  of  any  city  of  the  state  having  a  population  of  ^ve 
hundred  thousand  or  more.  The  voluntary  unincorporated  asso- 
ciations known  as  the  New  York  Stock  Exchange  and  the  Con- 
solidated Stock  and  Petroleum  Exchange  of  New  York,  and  the 


354  The  Insurance  Law.  §§  215-217. 

Booksellers  and  Stationers'  Provident  Association  of  the  United 
States  are  exempted  from  the  provisions  of  this  article.  This 
article  shall  not  prevent  any  corporation,  association  or  society 
authorized  to  do  business  hereunder  from  crediting  on  assess- 
ments of  its  certificate  holders  or  members  such  ratable  sums  out 
of  surplus  accumulations  or  reserve  funds  as  they  may  become 
entitled  to  under  the  terms  of  their  policy  or  certificate  contracts, 
provided,  however,  that  the  amount  so  credited  in  any  policy 
year  shall  not  exceed  one  annual  premium  on  such  Dolicy  or 
certificate  contract. 

Source.— Former  §  214,  as  amended  by  L.  1894,  chap.  399,  and  L.  1906, 
chap.  326;  originally  revised  from  L.  1883,  chap.  175,  §  21,  as  amended  by  L. 
1887,  chap.  285;  L.  1887,  (?hap.  285,  §  7,  as  amended  by  L.  1889,  chap.  566. 

Amended  by  L.  1911,  chap.  636. 

An  industrial  benefit  association  maj^  not  evade  the  law  prohibiting  pay- 
ment of  fixed  cash  payments  by  providing  in  policies  for  the  return  of  a 
"  portion  of  the  premiums  actually  paid  in  cash."  Attorney-General  Rep., 
Oct.  29,   1895. 

§  215.  Corporations  may  deposit  securities  witli  the  super- 
intendent of  insurance. 

Repealed  by  L.  1911,  ohap.  536. 

§  216.    Quorum. 

At  the  stated  meeting  for  the  election  of  officers,  trustees,  direct- 
ors or  managers  of  any  such  corporation,  association  or  society, 
a  majority  of  the  persons  entitled  to  vote  at  such  meeting  shall  not 
he  necessary  to  a  quorum. 
Source. — Former  §  216;  originally  revised  from  L.  1883,  chap.  175,  §  23. 

§  217.    Reincorporation. 

Any  corporation  incorporated  under  chapter  one  hundred  and 
seventy-five  of  the  laws  of  eighteen  hundred  and  eighty-three  and 
transacting  business  under  this  article  is  hereby  authorized  to  rein- 
corporate as  a  stock  corporation  under  its  existing  corporate  name, 
upon  compliance  with  the  provisions  of  article  two  of  this  chapter. 
Before  the  superintendent  of  insurance  shall  be  required  to  file 
and  record  a  certificate  of  such  reincorporation,  he  shall  be  satis- 
fied tbat  the  same  has  been  approved  by  a  majority  vote  of  the 
members  of  the  company  present  and  voting  at  a  meeting  of  tlie 
insured  called  to  consider  the  same,  of  which  meeting  a  written  or 


§§  218,  219.    Life  oh  Casualty  Insurance  Cokpokations.    355 

printed  notice  shall  have  been  mailed  to  each  member  who  shall 
have  been  such  for  tliirty  days  directed  to  his  address  appearing 
on  the  company's  books,  at  least  thirty  days  before  the  day  fixed 
for  such  meeting.  Upon  such  reincorporation  said  company  shall 
he  entitled  to  the  assets  and  shall  be  subject  to  the  existing  liabili- 
ties of  the  present  company,  including  all  contracts,  policies  or  cer- 
tificates with  its  members  and  agreements  between  such  members 
and  the  subscribers  to  any  guaranty  or  reserve  fund  heretofore 
made  or  approved  at  an  annual  meeting  of  the  members  or 
which  may  be  ratified  at  the  meeting  called  to  consider  such 
reincorporation. 

Source.—  L.  1893,  chap.  690,  §§  1,  2,  3. 

Section  36  of  tlie  General  Corporation  Law,  relating  to  forfeiture  of 
corporate  powers,  does  not  refer  to  a  change  of  form  or  reincorporation  as 
provided  by  this  section.     Attorney-General  Rep.,  March  29,  1916. 

§  218.    Admission  of  minors. 

A  corporation,  association,  organization  or  society  transacting 
the  business  of  life  or  casualty  insurance,  or  both,  upon  the 
co-operative  or  assessment  plan,  and  incorporated  under  or  subject 
to  this  article,  may  provide  by  its  by-laws  for  the  admission  of 
minors,  over  eighteen  years  of  age  to  membership  in  such  cor- 
poration, association,  organization  or  society  and  may  by  sucli 
by-laws  prescribe  the  conditions  of  such  admission  and  the  right* 
and  obligations  of  minors  as  members;  and  no  such  minor  shall 
by  reason  only  of  minority  be  deemed  incompetent  to  become 
such  member,  to  contract  for  insurance  provided  for  by  the  certifi- 
cate of  membership,  or  other  instrument  showing  such  member- 
ship or  fixing  his  privileges,  to  surrender  such  insurance  or  to  give 
a  valid  discharge  for  any  benefit  accruing  or  for  any  money  pay- 
able under  the  contract  of  insurance. 
Added  by  L.  1911,  chap.  176. 

§  219.    Policy  to  indicate  assessment  plan. 

Every  policy  or  certificate  hereafter  issued  by  any  corporation, 
company,  society,  organization  or  association  transacting  business 
under  this  article  shall  have  conspicuously  printed  on  the  face 
of  such  policy  or  certificate  and  at  the  top  thereof  in  capital  letters 
not  smaller  than  great  primer  roman  condensed  capitals,  the  words 
"  assessment  system," 


356  The  Insukance  Law.  §  220. 

Added  by  L.  1913,  chap.  28. 

Note. — ^The  purpose  of  the  amendment  of  this  section  by  chapter  28  of  1913 
was  to  protect  the  public  by  requiring  assessment  associations  in  this  vState 
to  more  clearly  indicate  in  their  contracts  the  precise  scope  and  character  ol 
such  contracts. — Ed. 

§  220.  Forms  of  policies  or  certificates  must  be  filed  and 
approved. 

On  and  after  the  first  daj  of  January,  nineteen  hundred  and 
fourteen,  no  policy  or  certificate  of  insurance  against  loss  or  dam- 
age from  the  sickness,  or  the  bodily  injury  or  death  of  the  in- 
sured by  accident,  shall  be  issued  or  delivered  in  this  state  by 
any  corporation  authorized  under  this  article,  until  copies  of  the 
form  thereof  have  been  filed  with  the  superintendent  of  insurance 
and  formally  approved  by  him.  On  or  before  the  first  day  of 
October,  nineteen  hundred  and  thirteen,  the  superintendent  shall 
make  and  announce  rules  and  regulations  concerning  the  terms 
and  provisions  of  such  forms  of  policies  and  certificates,  the  man- 
ner in  which  they  shall  be  printed,  and  the  practice  to  be  followed 
in  their  submission  and  approval.  The  superintendent  may,  in 
his  discretion,  permit  any  such  corporation  to  continue  to  use  in 
this  state  after  the  first  day  of  January,  nineteen  hundred  and 
fourteen,  any  form  of  policy  or  certificate,  which,  prior  to  October 
first,  nineteen  hundred  and  thirteen,  has  been  duly  approved  for 
such  corporation  under  section  one  hundred  and  seven  of  this 
chapter. 

Added  by  L.  1913,  chap.  51.    In  effect  October  1,  1913. 

Note. — The  purpose  of  the  addition  of  this  section  by  chapter  51  of  1913 
was  to  require  that  all  policies  or  certificates  issued  by  health  and  accident 
corporations  operating  upon  the  co-operative  or  assessment  plan  shall  be 
passed  upon  and  approved  by  the  insurance  department  and  that  the  superin- 
tendent must  on  or  before  October  1,  1913,  make  and  announce  rules  and 
regulations  concerning  the  terms  and  provisions  of  such  forms  of  policies 
and  certificates. — Ed. 


§  230.  Fkaternal  Benefit  Societies.  357 

AKTICLE  VII. 

Fraternal  Benefit  Societies. 

Section  230.  Definitions  and  scope  of  article. 

231.  Benefits,  beneficiaries  and  membership. 

232.  Certificates. 

233.  Funds. 

234.  Incorporation. 

235.  Existing  corporations  and  reincorporation. 

236.  Mergers. 

237.  Foreign  societies. 

238.  Place  of  meeting  and  liability  of  officers. 

239.  Limitation  upon  j  ower  to  waive  provisions  of  the  society's  laws. 

240.  Exemption  from  execution. 

241.  Amendments  to  constitution  and  laws. 

242.  Reports  and  valuations. 

243.  Examinations. 

244.  Revocation  of  license. 

245.  Exemption  of  certain  societies. 

246.  Taxation 

247.  Penalties. 

248.  Application  of  o^her  sections  of  this  flhapter. 

249.  Review. 

§  230.    Definitions  and  scope  of  article. 

1.  Any  corporation,  society,  order  or  voluntary  association, 
without  capital  stock,  organized  and  carried  on  solely  for  tlie 
mutual  benefit  of  its  members  and  their  beneficiaries,  but  not  for 
profit,  and  having  a  lodge  system  with  ritualistic  form  of  work 
and  representative  form  of  government,  and  which  shall  make 
provision  for  the  payment  of  benefits  in  accordance  with  section 
two  hundred  and  thirty-one  hereof,  is  hereby  declared  to  be  a 
fraternal  benefit  society. 

2.  Any  society  having  a  supreme  governing  or  legislative  body 
and  subordinate  lodges  or  branches,  by  whatever  name  known, 
into  which  members  shall  be  elected,  initiated  and  admitted  in 
accordance  with  its  constitution,  laws,  rules,  regulations  and 
prescribed  ritualistic  ceremonies,  which  subordinate  lodges  or 
branches  shall  be  required  by  the  laws  of  such  society  to  hold 
regular  or  stated  meetings  at  least  once  in  each  month,  shall  be 
deemed  to  be  operating  on  the  lodge  system. 


358  The  Insurance  Law.  §  231. 

3.  Any  such  society  shall  be  deemed  to  have  a  representative 
form  of  government  when  it  shall  provide  in  its  constitution  and 
laws  for  a  supreme  legislative  or  governing  body,  composed  of 
representatives  elected  either  by  the  members  or  by  delegates 
chosen  directly  or  indirectly  by  the  members,  together  with  such 
other  members  as  may  be  prescribed  by  its  constitution  and  laws; 
provided  that  the  elective  members  shall  constitute  a  majority  in 
number  and  have  not  less  than  two-thirds  of  the  votes  nor  I'^ss 
than  the  votes  required  to  amend  its  constitution  and  laws;  and 
provided,  further,  that  the  meetings  of  the  supreme  or  governing 
body  and  the  election  of  officers,  representatives  or  delegates  shall 
be  held  as  often  as  once  in  four  years.  The  members,  officers, 
representatives  or  delegates  of  a  fraternal  benefit  society  shall 
not  vote  by  proxy. 

4.  Except  as  herein  otherwise  provided,  such  societies  shall  be 
governed  by  this  article  and  shall  be  exempt  from  all  other  pro- 
visions of  the  insurance  laws  of  this  state,  not  only  in  govern- 
mental relations  with  the  state,  but  for  every  other  purpose,  and 
no  addition  thereto  hereafter  enacted  shall  apply  to  them  unless 
they  be  expressly  designated  therein. 

Added  by  L.  1911,  chap.  198. 

The  grand  lodge  of  a  society  cannot  legally  be  removed  from  the  state; 
public  policy  requires  that  corporations  organized  under  our  laws  he  and  at  all 
times  remain  within  the  jurisdiction  of  our  courts.  Attorney-General  Rep., 
April  15,  1903. 

The  superintendent  may  examine  a  company  before  granting  a  certificate  to 
ascertain  whether  the  proposed  organization  has  or  has  not  complied  with 
the  law;  the  insurance  department  has  jurisdiction  of  all  matters  relating  to 
the  organization  of  this  class  of  corporations  and  of  the  companies  when 
organized.     Attorney-General  Eep.,  Jan.   11,  1893. 

§  231.    Benefits,  beneficiaries  and  membership. 

1.  Every  society  transacting  business  under  this  article  shall 
provide  for  th-e  paym'ent  of  death  benefits,  and  may  provide  for 
the  payment  of  benefits  in  case  of  temporary  or  permanent 
physical  disability  as  the  result  either  of  disease,  accident  or  old 
age,  provided  that  the  period  of  life  at  which  the  payment  of 
benefits  for  disability  on  account  of  old  age  shall  commence  shall 
not  be  under  seventy  years;  and  also  may  provide  for  monuments 
or  tombstones  to  the  memory  of  its  deceased  members,  and  for 


§  231.  Fraternal  Benefit  Societies.  359 

the  payment  of  funeral  benefits.  Such  society  shall  have  the 
power  to  give  a  member  when  permanently  disabled  or  upon 
attaining  the  age  of  seventy  years  all  or  such  portion  of  the  face 
value  of  his  certificate  as  the  laws  of  the  society  may  specify; 
"provided  that  nothing  in  this  article  contained  shall  be  so  con- 
strued as  to  prevent  the  issuing  of  benefit  certificates  for  a  terra 
of  years  less  than  the  whole  of  life,  which  shall  be  payable  upon 
the  death  or  disability  of  the  member  occurring  mthin  the  term 
for  which  the  benefit  certificate  has  been  issued,  or  so  as  to 
permit  any  such  society  hereafter  to  make  any  promise  or  agree- 
ment for  the  payment  of  money  upon  the  expiration  of  a  fixed 
period,  except  as  provided  in  subdivision  (b)  of  subsection  one  of 
this  section. 

(a)  Such  society  shall,  upon  written  application  of  the  member, 
have  the  power  to  accept  a  part  of  the  periodical  contributions  in 
cash  and  to  charge  the  remainder,  not  exceeding  oue-half  of  the 
periodical  contribution,  against  the  certificate,  with  Interest  pay- 
able or  compounded  annually  at  a  rate  not  lower  than  four  per 
centum  per  annum;  provided  that  this  privilege  shall  not  be 
granted  except  to  societies  which  have  readjusted  or  may  here- 
after readjust  their  rates  of  contributions  and  to  contracts  affectrd 
by  such  readjustment. 

(b)  Any  society  which  shall  show,  by  the  annual  valuation 
hereinafter  provided  for,  that  it  is  accumulating  and  maintaiuino- 
the  full  reserve  required  by  a  table  of  mortality  not  lower  than 
the  American  Experience  table  and  four  per  centum  interest 
may  grant  to  its  members  extended  and  paid-up  protection  or 
such  withdrawal  equities  as  its  constitution  and  laws  may  permit: 
provided  that  such  grants  shall  in  no  case  exceed  in  value  the 
portion  of  the  reserve  to  the  credit  of  the  members  to  whom  they 
are  made. 

2.  Such  death  benefit  shall  in  certificates  hereafter  issued  be 
payable  only  to  wife,  husband,  relative  to  the  fourth  degree  of 
consanguinity,  father-in-law,  mother-in-law,  son-in-law,  daughter- 
in-law,  stepfather,  stepmother,  stepchildren,  children  by  legal 
adoption,  or  to  a  person  or  persons  dependent  upon  the  member; 
provided  that,  if,  after  the  issuance  of  the  original  certificate,  the 


3i6'0  The  Insukance  Law.  §  232. 

member  shall  become  dependent  upon  an  incorporated  charitable 
institution,  he  shall,  with  the  consent  of  the  society,  have  the 
privilege  of  making  such  institution  his  beneficiary.  Within  the 
above  restrictions  each  member  shall  have  the  right  to  designate 
his  beneficiary  and,  from  time  to  time,  may  have  the  same 
changed  in  accordance  with  the  laws,  rules  and  regulations  of  the 
society,  and  no  beneficiary  shall  have  or  obtain  any  vested  interest 
in  the  said  benefit  until  the  same  has  become  due  and  payable 
upon  the  death  of  the  said  member;  provided  that  any  society 
may,  by  its  laws,  limit  the  scope  of  beneficiaries  within  the  above 
classes.  'No  contract  under  this  article  shall  be  valid  which  shall 
be  conditioned  upon  an  agreement  or  understanding  that  the 
person  to  whom  the  death  benefit  is  made  payable  shall  pay  the 
periodical  or  other  contribution  of  the  member. 

3.  A  society  may  admit  to  beneficial  membership  any  person 
not  less  than  sixteen  and  not  more  than  sixty  years  of  age,  who 
has  been  examined  by  a  legally  qualified  physician  and  whose 
examination  has  been  supervised  and  approved  in  accordance  with 
the  laws  of  such  society;  provided  that  any  beneficiary  member 
of  the  society  who  shall  apply  for  a  certificate  providing  for 
disability  benefits  need  not  be  required  to  pass  an  additional 
medical  examination  therefor.  I^Tothing  herein  contained  shall 
prevent  such  society  from  accepting  general  or  social  members. 

Added  by  L.  1911,  chap.  198. 

A  fraternal  mutual  benefit  association  cannot  by  an  amendment  to  its 
constitution  or  by-laws  destroy  or  diminish  benefits  which  it  contracted  to 
give  its  members  when  they  became  such,  even  though  a  general  power  to 
amend  be  expressly  reserved;  the  above  rule  is  not  changed  by  section  232, 
Insurance  Law  (as  added  by  chap  198  of  1911).  Stewart  v.  Thorburn,  171 
App.   Div.,  258. 

§  232.    Certificates. 

Every  certificate  issued  by  any  such  society  shall  specify  the 
amount  of  benefit  provided  thereby,  and  shall  provide  that  the 
certificate,  the  charter  or  articles  of  incorporation  —  or,  if  a 
voluntary  association,  the  articles  of  association  —  the  constitu- 
tion and  laws  of  the  society  and  the  application  for  membership 
and  medical  examination,  signed  by  the  applicant,  with  all  amend- 
ments to  each  thereof,  shall  constitute  the  agreement  between  the 


§  233.  Fratekjs'al  Benefit  Societies.  361 

society  and  the  member;  and  copies  of  the  same,  certified  by  the 
secretary  of  the  society  or  corresponding  officer,  shall  be  received 
in  evidence  as  to  the  terms  and  conditions  thereof.  Any  changes, 
additions  or  amendments  to  said  charter  or  articles  of  incorpora- 
tion—  or,  if  a  voluntary  association,  articles  of  association  — 
constitution  or  laws  duly  made  or  enacted  subsequent  to  the  issu- 
ance of  the  benefit  certificate,  shall  bind  the  member  and  his 
beneficiaries,  and  shall  govern  and  control  the  agreement  in  all 
respects  the  same  as  though  such  changes,  additions  or  amend- 
ments had  been  made  prior  to  and  were  in  force  at  the  time  of  the 
application  for  membership. 

Added  by  L.  1911,  chap.  198. 

Section  232  of  the  Insurance  Law,  as  enacted  in  1911,  does  not  require  the 
issuance  of  certificates  of  membership  by  fraternal  benefit  societies.  Attor- 
ney-General Rep.,  April  19,  1912. 

This  section  as  enacted  in  1911  does  not  require  the  issuance  of  certificatea 
of  membership  by  fraternal  benefit  societies.  Attorney-General  Rep.,  1912, 
page  220. 

§  233.    Funds- 

1.  A  society  may  create,  maintain,  invest,  disburse  and  apply 
an  emergency,  surplus  or  other  similar  fund,  in  accordance  Avith 
its  laws.  Such  funds  shall  be  held,  invested  and  disbursed  for 
the  use  and  benefit  of  the  society,  and  no  member  or  beneficiar\ 
shall  have  or  acquire  individual  rights  therein,  or  become  entitled 
to  any  apportionment  or  the  surrender  of  any  part  thereof,  except 
as  provided  in  subdivision  (b)  of  subsection  one  of  sectioi.  two  hun- 
dred and  thirty-one  of  this  article.  The  funds  from  which  benefits 
shall  be  paid  and  from  which  the  expenses  of  the  society  shall  be 
defra^'cd  shall  be  derived  from  periodical  or  other  payments  by 
the  members  or  subordinate  bodies  of  the  society,  together  with 
accretions  of  such  funds;  provided  that  no  society,  domestic  or 
foreign,  shall  hereafter  be  incorporated  or  admitted  to  transact 
business  in  this  state  which  does  not  provide  for  stated  periodical 
contributions  sufficient  to  provide  for  meeting  the  mortuary 
obligations  contracted,  when  valued  upon  the  basis  of  the  x^ational 
Fraternal  Congress  table  of  mortality  as  adopted  by  the  iNTational 
Fraternal  Congress,  August  twenty-third,  eighteen  hundred  and 
ninety-nine,  or  any  higher  standard,  with  interest  assumption  not 


362  The  Insurance  Law.  §  233. 

more  tlian  four  per  centum  per  annum,  nor  to  write  or  accept 
members  for  temporary  or  permanent  disability  benefits,  except 
upon  tables  based  upon  reliable  experience,  with  an  interest 
assumption  not  higher  than  four  per  centum  per  annum. 

'  2.  Deferred  payments  of  installmcmts  of  claims  shall  be  con- 
sidered as  &Ked  liabilities  on  the  happening  of  the  contingency 
upon  which  such  payments  or  installments  are  thereafter  to  be 
paid.  Such  liability  shall  be  the  present  value  of  such  future 
payments  or  installments  upon  the  rate  of  interest  and  mortality 
assumed  by  the  society  for  valuation;  and  every  society  shall 
maintain  a  fund  sufficient  to  meet  such  liability,  regardless  of 
proposed  future  collections  to  meet  any  such  liabilities. 

3.  A  society  shall  invest  its  funds  only  in  securities  permitted 
by  the  laws  of  this  state  for  the  investment  of  the  assets  of  life 
insurance  companies;  provided  that  any  foreign  society  permitted 
or  seeking  to  do  business  in  this  §tate,  which  invests  its  funds  in 
accordance  with  the  laws  of  the  state  in  which  it  is  incorporated, 
shall  be  held  to  meet  the  requirements  of  this  article  for  the 
investment  of  funds. 

4.  Every  provision  of  the  laws  of  a  society  for  payment  by 
its  members,  in  whatever  form  made,  shall  distinctly  state  the 
purpose  of  the  same  and  the  proportion  thereof  which  may  be 
used  for  expenses,  and  no  part  of  the  money  collected  for 
mortuary  or  disability  purposes,  or  the  net  accretions  of  either 
or  any  of  said  funds,  shall  be  used  for  expenses. 

Added  by  L.  1911,  chap.  198. 

Amendments  to  the  constitution  or  by-laws  of  a  mutual  benefit  association, 
which  nullify  or  cut  down  benefits  to  which  a  beneficiary  has  become  entitled 
under  ^his  contract,  are  void  and  of  no  effect  even  wihere  the  right  to  amend 
has  been  expressly  reserved.    Wright  v.  Knights  of  Maccabees,  196  N.  Y.,  391. 

A  mutual  benefit  association  cannot  change  a  constitutional  provision  that 
a  beneficiary  shall  be  assessed  according  to  age  when  admitted,  without  his 
consent.    Dowdall  v.  Cath.  Mut.  Ben,  Assn ,  196  N.  Y.,  405. 

A  fraternal  benefit  society,  having  classes  "A"  and  "  B,"  cannot  transfer 
funds  contributed  by  certificate  holders  in  class  "  B  "  to  other  classes  without 
the  consent  of  all  the  members  remaining  in  Class  "  B."  Attorney-General 
Rep.,  Nov.  28,  1911. 

A  member  and  ttie  society  cannot,  by  any  agreement,  in  which  all  members 
of  the  cash  dividend  class  do  not  join,  take  out  of  the  benefit  fund  any  sum 
M  the  equitable  share  of  a  member.    Attorney-General  Rep.,  Feb.  8,  1912. 


§  234.  Fraternal  Benefit  Societies.  363 

The  exchanging  of  a  member,  from  one  class  to  another,  does  not  permit 
the  transfer  of  the  amount,  to  which  he  would  be  equitably  entitled  in  the 
benefit  fund  of  his  class,  to  the  other  class,  without  the  consent  of  all  mem- 
bers interested  in  the  fund.    Attorney -General  Rep.,  March  22,  1912. 

Section  36,  prohibiting  a  director  from  being  pecuniarily  interested  as  a 
member  in  any  loan  from  a  corporation,  applies  to  fraternal  beneficiary 
societies  or  orders  under  Article  VII.     Attorney-General  Rep.,  Feb.  G,  1909. 

§  234.    Incorporation. 

1.  Seven  or  more  persons,  citizens  of  the  United  States  and  a 
majority  of  whom  are  citizens  of  this  state,  who  desire  to  form 
a  fraternal  benefit  society,  as  defined  by  this  article,  may  make 
and  sign  (giving  their  addresses),  and  acknowledge  before  some 
officer  competent  to  take  acknowledgment  of  deeds,  articles  of 
incorporation,  in  which  shall  be  stated: 

(a)  The  proposed  corporate  name  of  the  society,  which  shall 
not  so  closely  resemble  the  name  of  any  society  or  insurance 
company  already  transacting  business  in  this  state  as  to  mislead 
the  public  or  lead  to  confusion. 

(b)  The  purpose  for  which  it  is  formed  —  which  shall  not 
include  more  liberal  powers  than  are  granted  by  this  article, 
provided  that  any  lawful  social,  intellectual,  educational,  chari- 
table, benevolent,  moral  or  religious  advantages  may  be  set  forth 
among  the  purposes  of  the  society  —  and  the  mode  in  which  its 
corporate  powers  are  to  be  exercised. 

(c)  The  place  where  its  principal  office  shall  be  located  within 
the  state. 

(d)  The  names,  residences  and  official  titles  of  all  the  officers, 
trustees,  directors  or  other  persons  who  are  to  have  and  exercise 
the  general  control  and  management  of  the  affairs  and  funds  of 
the  society  for  the  first  year,  or  until  the  ensuing  election  at 
which  all  such  officers  shall  be  elected  by  the  supreme  legislative 
or  governing  body;  which  election  shall  be  held  not  later  than  one 
year  from  the  date  of  the  issuance  of  the  permanent  certificate. 

2.  Such  articles  of  incorporation,  with  duly  certified  copies  of 
the  constitution  and  laws,  rules  and  regulations,  and  copies  of  all 
proposed  forms  of  benefit  certificates,  applications  therefor  and 
circulars  to  be  issued  bv  such  society,  together  with  a  bond  in 


364  The  Insurance  Law.  §  234. 

the  sum  of  five  thousand  dollars,  with  sureties  approved  by  the 
superintendent  of  insurance,  conditioned  upon  the  return  to 
applicants  of  the  advanced  payments,  as  provided  in  this  section, 
if  the  organization  is  not  completed  within  one  year,  shall  be 
filed  with  the  superintendent  of  insurance,  who  may  require  such 
further  information  as  he  deems  necessary;  and,  if  the  purposes 
of  the  society  conform  to  the  requirements  of  this  article  and  all 
provisions  of  law  have  been  complied  with,  such  superintendent 
of  insurance  shall  so  certify,  retain  and  file  the  articles  of  incor- 
poration, and  furnish  the  incorporators  a  preliminary  certificate 
authorizing  said  society  to  solicit  members,  as  hereinafter 
provided. 

3.  Upon  receipt  of  said  certificate  from  the  superintendent 
of  insurance,  the  society  may  solicit  members  for  the  purpose  of 
completing  its  organization,  and  shall  collect  from  each  applicant 
the  amount  of  not  less  than  one  regular  monthly  payment,  in 
accordance  with  its  table  of  rates  as  provided  by  its  constitution 
and  laws,  and  shall  issue  to  each  such  applicant  a  receipt  for  the 
amount  so  collected.  But  no  society  shall  incur  any  liability 
other  than  for  such  advanced  payments,  nor  issue  any  benefit 
certificate,  nor  pay  or  allow,  nor  offer  or  promise  to  pay  or  allow, 
to  any  person  any  death  or  disability  benefit  until  actual,  bona 
fide  applications  for  death  benefit  certificates  have  been  secured 
upon  at  least  five  hundred  lives  for  -at  least  one  thousand  dollars 
each,  and  all  such  applicants  for  death  benefits  shall  have  been 
regularly  examined  by  legally  qualified  practicing  physicians, 
and  certificates  of  such  examinations  have  been  duly  filed  and 
approved  by  the  chief  medical  examiner  of  such  society;  nor  until 
there  shall  be  established  ten  subordinate  lodges  or  branches, 
into  which  said  ^Ye  hundred. applicants  have  been  initiated;  nor 
until  there  has  been  submitted  to  the  superintendent  of  insur- 
ance, under  oath  of  the  president  and  the  secretary  or  corr<^- 
sponding  officers  of  such  society,  a  list  of  such  applicants,  giving 
their  names,  addresses,  date  examined,  date  approved,  date  initi- 
ated, name  and  number  of  the  subor din-ate  branch  of  which  each 
applicant  is  a  member,  amount  of  benefits  to  be  granted,  rate  of 
stated  periodical  contributions  —  which  sh,all  be  sufficient  to  pro- 
vide for  meeting  the  mortuary  obligation  contracted,  when  valued 


§  234.  Fraternal  Benefit  Societies.  365 

for  death  benefits  upon  the  basis  of  the  National  Fraternal  Con- 
gress table  of  mortality,  as  adopted  by  the  National  Fraternal 
Congress  August  twenty-third,  eighteen  hundred  and  ninety-nine, 
or  any  higher  standard  at  the  option  of  the  society,  and  for  dis- 
ability benefits,  by  tables  based  upon  reliable  experience,  and  for 
combined  d^ath  and  permanent  total  disability  benefits  by  tables 
based  upon  reliable  experience,  with  an  interest  assumption  not 
higher  than  four  per  centum  per  annum;  nor  until  it  shall  be 
shown  to  the  superintendent  of  insurance,  by  the  sworn  statement 
of  the  treasurer  or  corresponding  officer  of  such  society,  that  at 
least  five  hundred  applicants  have  each  paid  in  cash  not  less  than 
one  regular  monthly  payment,  as  herein  provided,  per  one  thou- 
sand dollars  of  indemnity  to  be  effected,  which  payments  in  the 
aggregate  shall  amount  to  at  least  twenty-five  hundred  dollars,  all 
of  which  shall  be  credited  to  the  mortuary  or  disability  fund  on 
account  of  such  applicants,  and  no  part  of  which  may  be  used  for 
expensesL 

4.  Such  advanced  payments  shall,  during  the  period  of 
organization,  be  held  in  trust  and,  if  the  organization  is  not 
completed  within  one  year,  as  hereinafter  provided,  returned  to 
said  applicants. 

5.  The  superintendent  of  insurance  may  make  such  examine 
tion  and  require  such  further  information  as  he  deems  advisable, 
and,  upon  presentation  of  satisfactory  evidence  that  the  society 
has  complied  with  all  the  provisions  of  law,  he  shall  issue  to  such 
society  a  certificate  to  that  effect.  Such  certifiate  shall  be  prima 
facie  evidence  of  the  existence  of  such  society  at  the  date  thereof. 
The  superintendent  of  insurance  shall  cause  a  record  of  such  cer- 
tificate to  be  made,  and  a  certified  copy  of  such  record  may  be 
given  in  evidence  with  like  effect  as  the  original  certificate. 

6.  No  preliminary  certificate  granted  under  the  provisions  of 
this  section  shall  be  valid  after  one  year  from  its  date  or  after 
such  further  period,  not  exceeding  one  year,  as  may  be  authorized 
by  the  superintendent  of  insurance,  upon  cause  shown,  unless 
the  five  hundred  applicants  herein  required  have  been  secured 
and  the  organization  has  been  completed  as  herein  provided;  and 
the  articles  of  incorporation  and  all  proceedings  thereunder  shall 


366  The  Insurance  Law.  .^ifg  234. 

become  null  and  void  in  one  year  from  the  date  of  said  preliminary 
certificate,  or  at  the  expiration  of  said  extended  period,  unless 
such  society  shall  have  completed  its  organization  and  commenced 
business  as  herein  provided. 

7.  Every  such  society  shall  have  the  power  to  make  a  consti- 
tution and  by-laws  for  the  government  thereof,  the  admission  of 
its  members,  the  management  of  its  affairs  and  the  fixing  and 
readjusting  of  the  rates  of  contribution  of  its  members  from 
time  to  time;  .and  it  shall  have  the  power  to  chance,  alter,  add  to 
or  amend  such  constitution  and  by-laws,  and  shall  have  such  other 
powers  as  are  necessary  and  incidental  to  the  carrying  into  effect 
of  the  objects  and  purposes  of  tbe  society. 

Added  by  L.  1911,  chap.  198. 

See  §  6,  ante.     Fees  of  superintendent  for  filing  papers. 

See  §   10,  ante.    Certificate  of  attorney-general. 

See  §  11,  ante.  Examination  by  superintendent  as  to  payment  of  capital, 
•te. 

See  §  4,  General  Corporation  La,w,  chap.  28  of  1909,  as  to  qualifications  of 
incorporators. 

See  chap.  733  of  1900.    Reincorporation  of  foreign  moneyed  corporations. 

A  fraternal  beneficiary  society  incorporated  under  the  laws  of  a  foreign 
state  and  conducting  a  life  insurance  business  on  the  co-operative  or 
assessment  plan,  and  requiring  by  its  constitution  and  by-laws  applicants  for 
membership  to  pass  a  medical  examination  upon  the  result  of  which  admission 
depends,  is  a  life  insurance  company  or  association  within  the  meaning  of  the 
question  "  Have  you  ever  been  rejected  by  any  life  insurance  company  or 
association  ?  "  and  where  an  applicant  for  admission  to  one  division  or  tent  of 
such  society,  who  had  previously  been  rejected  by  another  division  or  tent  of 
the  same  society  upon  medical  examination,  which  objection  was  known  to 
him,  answered  "  no  "  to  such  question,  the  answer  is  untruthful  and  fraudulent 
and  avoids  the  certificate  of  insurance  issued  to  such  applicant,  where  he 
stipulated  in  his  application  therefor  that  any  untruthful  or  fraudulent 
answers  should  vitiate  the  certificate  and  forfeit  all  payments  made  thereon. 
Alden  v.  Knights  of  Maccabees,  178  N.  Y.,  635. 

A  corporation  organized  under  this  section  has  no  power  to  receive,  as 
members,  infants  of  such  tender  years  that  they  are  unable  to  exercise  any 
choice  in  becoming  members  or  to  exercise  the  powers  with  which  members  are 
invested.    Matter  of  G.  M.  B.  Assn.,  135  N*.  Y.,  280. 

An  insurance  corporation  organized  under  any  article  may  properly  change 
its  name  by  a  compliance  with  Title  X  of  Chapter  XVTT  of  the  Code  of  Civil 
Procedure.     Attorney-General  Rep.,  Aug.  G,  1903. 

A  fraternal  beneficiary  society  upon  reinsurance  of  its  risks  and  loss  of  all 
its  members  is  not  dissolved,  and  may  either  apply  for  leave  to  renew  its 


§  235.  Fraternal  Benefit  Societies.  367 

business  or  transfer  its  franchise  to  others;  a  corporation  is  an  artificial 
creature  created  by  the  state,  and  only  the  state  can  destroy  it.  Attorney- 
General  Rep.,  Nov.  4,  1910. 

The  certificate  of  the  fraternal  beneficiary  society  providing  that  the 
member  himself  may  withdraw  a  certain  sum  in  case  of  the  death  of  his  wife 
is  double  insurance;  the  intendment  of  the  statute  is  to  limit  cases  of  sickness, 
etc.,  in  which  there  may  be  payment  of  benefits  to  cases  of  either  disability  or 
death  of  the  member.     Attorney-iGeneral  Rep.,  Nov.  10,  1903. 

Collections  for  beneficiary  claims,  arising  from  sickness,  disability  or  deatli, 
cannot  be  used  for  expenses.  Notice  of  assessment  may  include  both,  but  must 
divide  the  sums  so  applied.     Attorney-General  Rep.,  Aug.  3,  1896. 

Section  58  of  the  Insurance  Law,  requiring  policies  of  insurance  to  contain 
the  entire  contract,  does  not  apply  to  fraternal  beneificiary  orders,  operating 
under  Article  VII.  Such  societies  do  not  issue  "  policies,"  but  "  membership 
certifico/tes."     Attorney-General  Rep.,  Feb.  13,  1908. 

An  assessment  fraternal  beneficiary  society  has  no  power  to  make  a  by-law 
agreeing  to  lend  money  or  to  otherwise  pay  a  benefit  to  a  member  except  in 
the  event  of  sickness,  disability  or  death.  Attorney-General  Rep.,  April  23, 
1908. 

Fraternal  beneficiary  societies  are  not  required  to  issue  certificates  of  mem- 
bership to  those  persons  who  join.     Attorney-General  Rep.,  May  28,  1908. 

§  235.    Existing  corporations  and  reincorporation. 

Any  such  society  now  engaged  in  transacting  business  in  tliis 
state  may  exercise,  after  the  adoption  of  this  article,  all  of  the 
rights  conferred  thereby,  including  the  powers  specified  in  sub- 
section seven  of  section  two  hundred  and  thirty-four  of  this 
chapter  and  all  of  the  rights,  powers  and  privileges  now  exercised 
or  possessed  by  it  under  its  charter  or  articles  of  incorporation  — 
if  incorporated  —  not  inconsistent  with  this  article;  or,  if  it  be 
a  voluntary  association,  it  may  incorporate  hereunder.  But  no 
society  already  organized  shall  be  required  to  reincorporate  here- 
under, and  any  such  society  may  amend  its  articles  of  incorpora- 
tion from  time  to  time,  in  the  manner  provided  therein  or  in  its 
|constitution   and  laws,   and  .all  such   amendments   shall   be  filed 

ith  the  superintendent  of  insurance  and  shall  become  operative 
^jpon  such  filing,  unless  a  later  time  be  provided  in  such  amend- 
Iments  or  in  its  articles  of  incorporation,  constitution  or  laws. 

Added  by  L.  1911,  chap.  198. 

See  §  37,  ante.  Effect  of  Insurance  Law  on  corporations  previously 
-.incorporated. 


868  The  Insurance  Law.  §  236. 

See  §  52,  ante.  Reorganization  of  existing  corporations  and  amendments 
of  certificates. 

See  §  100,  Statutory  Construction  Law,  chap.  27  of  1909,  as  to  effect  or 
repeal  and  re-enactment  of  existing  statutes. 

Section  232  of  the  Insurance  Law,  as  enacted  in  1911,  does  not  require  the 
issuance  of  certificates  of  membership  by  fraternal  benefit  societies.  Attor- 
ney-General Rep.,  April  19,  1912. 


§  236.    Mergers. 

No  domestic  society  shall  merge  with  or  accept,  by  contract  of 
reinsurance  or  otherwise,  the  transfer  of  substantially  the  entire 
membership  or  funds  of  -any  other  society,  unless  such  merger, 
reinsurance  or  transfer  is  evidenced  by  a  contract  in  writing, 
setting  out  in  full  the  terms  and  conditions  of  the  same,  and  filed 
with  the  superintendent  of  insurance  of  this  state,  together  with 
a  sworn  statement  of  the  financial  condition  of  each  of  said  socie- 
ties, made  by  the  respective  presidents  and  secretaries,  or  corre- 
sponding officers  together  with  a  certificate  of  such  officers,  duly 
verified  under  oath,  that  such  merger,  reinsurance  or  transfer 
has  been  approved  by  a  vote  of  two-thirds  of  the  members  of  the 
supreme  legislative  or  governing  body  of  each  of  said  societies. 
Upon  the  submission  of  said  contract,  financial  statements  and 
certificates,  the  superintendent  of  insurance  shall  examine  the 
same  and  if  he  shall  find  such  financial  statements  to  be  correct 
and  the  said  contract  to  be  in  conformity  with  the  provisions  of 
this  section,  and  that  such  merger,  reinsurance  or  transfer  is 
just  and  equitable  to  the  members  of  each  of  said  societies,  he 
shall  approve  the  same,  issue  his  certificate  to  that  effect  and, 
thereupon,  the  said  contract  of  merger,  reinsurance  or  transfer 
shall  be  of  full  force  and  effect;  provided  that  no  such  merger, 
reinsurance  or  transfer  proposed  by  two  societies  not  incorporated 
in  the  same  state  shall  go  into  effect  until  it  is  approved  by  the 
insurance  commissioner,  or  corresponding  officer,  of  each  state 
incorporating  the  societies  involved  in  the  proposed  transaction, 
and  their  joint  certificate  of  approval  of  the  contract  therefor  is 
issued. 

Added  by  L.  1911,  chap.  198. 


I 


§  237.  Feateknal  Benefit  Societies.  369 

§  237.    Foreign  Societies. 

1.  Foreign  societies  which  are  now  authorized  to  transact 
business  in  this  state  may  continue  such  business  until  the  first 
day  of  April  next  succeeding  the  adoption  of  this  article,  and  the 
authority  of  such  societies  may  thereafter  be  renewed  annually, 
to  terminate  in  all  cases  on  the  first  day  of  the  succeeding  April; 
provided,  however,  that  the  license  shall  continue  in  full  force 
and  effect  until  the  new  license  shall  be  issued  or  be  specifically 
refused.  A  duly  certified  copy  or  duplicate  of  such  license  shall 
be  prima  facie  evidence  that  the  licensee  is  a  fraternal  benefit 
society,  within  the  meaning  of  this  article. 

2.  'No  foreign  society  now  transacting  business,  organized 
prior  to  the  adoption  of  this  article,  which  is  not  now  authorized 
to  transact  business  in  this  state,  shall  transact  any  business? 
herein  without  a  license  from  the  superintendent  of  insurance. 
Any  such  society  may  be  licensed  to  transact  business  within  this 
state,  upon  filing  with  such  superintendent  a  duly  certified  copy 
of  its  charter  or  articles  of  association,  a  copy  of  its  constitution 
and  laws,  certified  by  its  secretary  or  corresponding  ofiicer,  a 
power  of  attorney  to  such  superintendent  as  hereinafter  provided, 
a  statement  of  its  business,  under  oath  of  its  president  and  secre- 
tary or  corresponding  ofiicers,  in  the  form  required  by  the  super- 
intendent, and  duly  verified  by  an  examination  made  by  the 
supervising  insurance  ofiicial  of  its  home  state  or  any  other  state 
satisfactory  to  the  superintendent  of  insurance  of  this  state,  a 
certificate  from  the  proper  ofiicial  in  its  home  state,  province  or 
country  that  the  society  is  legally  organized,  a  copy  of  its  con- 
tract—  which  must  show  that  benefits- are  provided  for  by  peri- 
odical or  other  payments  by  persons  holding  similar  contracts — 
and  upon  furnishing  the  superintendent  such  other  information 
as  he  m,ay  deem  necessary  to  a  proper  exhibit  of  its  business  and 
plan  of  working.  Upon  compliance  with  these  requirements, 
such  foreign  society  s-hall,  subject  to  the  provisions  of  section 
nine  of  this  chapter,  be  entitled  to  do  business  in  this  state  until 
the  first  day  of  the  succeeding  April,  and  such  license  shall,  upon 
compliance  with  the  provisions  of  this  article,  be  renewed  an- 
riually,  to  terminate  in  all  cases  on  the  first  day  of  the  succeeding 


370  The  Insueance  Law.  §  237. 

April;  provided  however,  that  such  license  shall  continue  in  full 
force  and  effect  until  the  new  license  shall  be  issued  or  be  specific- 
ally refused.  Any  foreign  society  desiring  admission  to  this 
state  must  have  the  qualifications  required  of  domestic  societies 
organized  under  this  article,  and  have  its  assets  invested  as 
required  by  the  laws  of  the  state,  territory,  district ,  country  or 
province  wherein  it  is  organized.  When  the  superintendent  re- 
fuses to  license  any  society,  or  revokes  its  authority  to  do  business 
in  this  state,  he  shall  reduce  his  ruling,  order  or  decision  to  writ- 
ing and  file  the  same  in  his  office,  and  shall,  upon  request,  furnish 
a  copy  thereof,  together  with  a  statement  of  his  reasons,  to  the 
officers  of  the  society,  and  such  action  of  the  superintendent  shall 
be  reviewable  by  proper  proceedings  in  any  court  of  competent 
jurisdiction  within  the  state;  provided,  however,  that  nothing 
contained  in  this  or  the  preceding  paragraph  shall  be  taken  or 
construed  as  preventing  any  such  society  from. continuing  in  good 
faith  all  contracts  made  in  this  state  during  the  time  the  society 
was  legally  authorized  to  transact  business  herein. 

3.  Every  foreign  society  now  transacting  business  in  this  state 
shall,  within  thirty  days  after  the  adoption  of  this  article,  and 
every  such  society  hereafter  applying  for  admission  shall,  before 
being  licensed,  appoint  in  writing  the  superintendent  of  insurance 
to  be  its  true  and  lawful  attorney,  upon  whom  all  legal  process 
in  any  action  or  proceeding  against  it  shall  be  served,  and  in  such 
writing  shdl  agree  that  any  lawful  process  against  it  which  is 
served  upon  such  attorney  shall  be  of  the  same  legal  force  and 
validity  as  if  served  upon  the  society,  and  that  the  authority  shall 
continue  in  force  so  long  as  any  liability  remains  outstanding  in 
this  state.  Copies  of  such  appointment,  certified  by  said  super- 
intendent of  insurance,  shall  be  deemed  sufficient  evidence  thereof 
and  shall  be  admitted  in  evidence  with  the  same  force  and  effect 
as  would  the  original.  Such  service  may  be  made  upon  such 
attorney,  or,  in  his  absence,  upon  the  person  in  charge  of  his  office, 
and  shall  be  deemed  sufficient  service  upon  such  society ;  provided, 
however,  that  no  such  service  shall  be  valid  or  binding  against 
any  such  society  when  it  is  required  thereunder  to  file  its  answer, 
pleading  or  defense  in  less  than  twenty  days  from  the  date  of 
such  service  of  such  process. ,  When  legal  process  against  any  such 


§§  238,  239.      Fkateknal  Benefit  Societies.  371 

society  is  served  upon  said  superintendent  of  insurance,  he  shall 
forthwith  forward  by  registered  mail  one  of  the  duplicate  copies 
thereof,  prepaid,  directed  to  its  secretary  or  corresponding  officer. 

Added  by  L.  1911,  chap.  198. 

Amended  by  L.  1914,  chap.  106.    In  effect  April  3,  1914. 

The  purpose  of  the  amendment  of  this  section  by  chap.  106  of  1914  was  to 
add  the  last  part  of  the  next  to  the  last  sentence,  "  provided,  however,  that 
no  such  service     *     *     *     of  such  service  of  suc'h  process."     Ed. 

The  superintendicnt  of  insurance  may  examine  a  company  before  granting 
a  certificate  to  ascertain  wh&ther  the  proposed  organization  has  or  has  not 
complied  with  the  law;  the  insurance  department  has  jurisdiction  of  all 
matters  relating  to  the  organization  of  this  class  of  corporations  and  of  the 
companies  when   organized.     Attorney-General  Rep.,   Jan.   11,   1893. 

§  238.    Place  of  meeting  and  liability  of  officers. 

1.  Any  domestic  society  may  provide  that  the  meetings  of  its 
legislative  or  governing  body  may  be  held  in  any  state,  district, 
province  or  territory  wherein  such  society  has  subordinate 
branches  and  all  business  transacted  at  such  meetings  shall  be 
as  valid  in  all  respects  as  if  such  meetings  were  held  in  this  state. 
But  its  principal  office  shall  be  located  in  this  state. 

2.  Officers  and  members  of  the  supreme,  grand  or  any  sub- 
ordinate body  of  any  such  incorporated  society  shall  not  be  in- 
dividually liable  for  the  payment  of  any  disability  or  death  bene- 
fit provided  for  in  the  laws  land  agreements  of  such  society,  but 
the  same  shall  be  payable  only  out  of  the  funds  of  such  society 
and  in  the  manner  provided  by  its  laws. 

The  legislative  intent  in  the  enactment  of  §§  212  and  238  of  the  Insurance 
Law,  to  place  co-operative  and  assessment  insurance  in  a  class  by  itself,  was 
to  relieve  such  insurance  from  the  operation  of  §  52  of  the  Domestic  Relations 
Law  making  insurance  money  realized  by  a  wife  on  the  life  of  her  husband 
subject  to  his  debts,  where  the  annual  premium  paid  out  of  his  property 
exceeds  $500.    Dominick  v.  Stern,  79  Misc.,  271. 

Added  by  L.  1911,  chap.  198. 

§  239.  Limitation  upon  power  to  waive  provisions  of  the 
society's  laws. 

The  constitution  and  laws  of  the  society  may  provide  tliat  no 
subordinate  body,  nor  any  of  its  subordinate  officers  or  members, 
shall  have  the  power  or  authority  to  waive  any  of  the  provisions 
thereof,  and  the  same  shall  be  binding  upon  the  society  and  each 
and  every  member  thereof  and  on  all  beneficiaries  of  members. 
Added  by  L.  1911,  chap.  198. 


372  The  Insukance  Law.  §§   240-242. 

§  240.    Exemption  from  execution. 

No  money  or  other  benefit,  charity,  relief  or  aid  to  be  paid, 
provided  or  rendered  by  any  such  society  shall  be  liable  to  attach- 
ment, garnishment  or  other  process,  or  to  be  seized,  taken,  appro- 
priated or  applied  by  any  legal  or  equitable  process  or  operation 
of  law  to  pay  any  debt  or  liability  of  a  member  or  beneficiary,  or 
any  other  person  who  may  have  a  right  thereunder,  either  before 
or  after  payment. 

Added  by  L.  1911,  chap.  198 

§  241.    Amendments  to  constitution  and  laws. 

Every  society  transacting  business  under  this  article  shall  file 
with  the  superintendent  of  insurance  a  duly  certified  copy  of  all 
amendments  of  or  additions  to  its  constitution  and  laws,  within 
ninety  days  after  the  enactment  of  the  same.  Printed  copies  of 
the  constitution  and  laws  as  amended,  changed  or  added  to,  certi- 
fied by  the  secretary  or  corresponding  officer  of  the  society,  shal] 
be  prima  facie  evidence  of  the  legal  ladoption  thereof. 

Added  by  L.  1911,  chap.  198. 

§  242.    Reports  and  valuations. 

1.  Every  society  transacting  business  in  this  state  shall, 
annually,  on  or  before  the  first  day  of  March,  file  with  the  super- 
intendent of  insurance,  in  such  form  as  he  may  require,  a  state- 
ment under  oath  of  its  president  and  secretary,  or  corresponding 
officers,  of  its  condition  and  standing  on  the  thirty-first  day  of 
December  last  preceding,  and  of  its  transactions  for  the  year  end- 
ing on  that  date,  and  shall  also  furnish  such  other  information 
as  the  superintendent  may  deem  necessiary  to  a  proper  exhibit  of 
its  business  and  plan  of  working.  Such  superintendent  may  at 
other  times  require  any  further  statement  he  may  deem  neces- 
sary to  be  made  relating  to  such  society. 

2.  In  addition  to  the  annual  report  herein  required,  each  society 
shall  report,  annually,  to  the  superintendent  a  valuation  of  its 
certificates  in  force  on  December  thirty-first  last  preceding,  ex- 
cluding those  issued  within  the  year  for  which  the  report  is  filed, 
in  cases  where  the  contributions  for  the  first  year,  in  whoV  or  in 


§  242.  Fraternal  Benefit  Societies.  37'3 

part,  are  used  for  current  mortaUty  and  expenses;  provided  the 
first  report  of  valuation  shall  be  made  as  of  December  thirty-first, 
nineteen  hundred  and  twelve.  Such  report  of  valuation  shall 
show,  as  contingent  liabilities,  the  present  midyear  value  of  the 
promised  benefits  provided  in  the  constitution  and  laws  of  such 
society  under  certificates  then  subject  to  valuation;  and,  as  con- 
tingent assets,  the  present  midyear  value  of  the  future  net  con- 
tributions provided  in  the  constitution  and  laws  as  the  same  are  in 
practice  actually  collected,  not  including  therein  any  value  for 
the  right  to  make  extra  assessments.  Provided  that  any  excess 
of  the  present  value  of  future  contributions  over  the  present  value 
of  promised  benefits  under  certificates  providing  for  disability 
benefits  (other  than  total  permanent  disability  in  combination 
with  death  benefits)  shall  not  be  allowed  in  reduction  of  the  lia- 
bility under  other  forms  of  certificates.  At  the  option  of  any 
society,  in  lieu  of  the  above,  the  valuation  may  show  the  net  value 
of  the  certificates  subject  to  valuation,  hereinbefore  provided, 
and  said  net  value,  when  computed  in  case  of  monthly  contribu- 
tions, may  be  the  mean  of  the  terminal  values  for  the  end  of  the 
preceding  and  of  the  current  insurance  years. 

3.  Such  valuation  shall  be  certified  by  a  competent  accountant 
or  actuary,  or,  at  the  request  and  expense  of  the  society,  verified 
by  the  actuary  of  the  department  of  insurance  of  the  home 
state  of  the  society,  and  shall  be  filed  with  the  superintendent 
within  ninety  days  after  the  submission  of  the  last  preceding  an- 
nual report.  The  legal  minimum  standard  of  valuation  for  all 
certificates,  except  those  for  disability  benefits,  shall  be  the 
National  Fraternal  Congress  table  of  mortality,  as  adopted  by  the 
National  Fraternal  Congress,  August  twenty-third,  eighteen  hun- 
dred and  ninety-nine,  or,  at  the  option  of  the  society,  any  higher 
table,  or  it  may  use  a  table  based  upon  the  society's  own  experi- 
ence of  at  least  twenty  years  and  covering  not  less  than  one  hun- 
dred thousand  lives,  with  interest  assumption  not  more  than  four 
per  centum  per  annum.  Each  such  valuation  report  shall  set 
forth  clearly  and  fully  the  mortality  and  interest  basis  and  the 
method  of  valuation.  Any  society  providing  for  disability  bene- 
fits shall  keep  the  net  contributions  for  such  benefits  in  a  fund 


374  The  Insurance  Law.  §  24,2. 

separate  and  apart  from  all  other  benefit  and  expense  funds  and 
the  valuation  of  all  other  business  of  the  society;  provided  that, 
where  a  combined  contribution  table  is  used  by  a  society  for  both 
death  land  permanent  total  disability  benefits,  the  valuation  shall 
be  according  to  tables  of  reliable  experience,  and,  in  such  case,  a 
separation  of  the  funds  shall  not  be  required.  The  valuation 
herein  provided  for  shall  not  be  considered  or  regarded  as  a  test 
of  the  financial  solvency  of  the  society,  except  as  provided  in  sub- 
section five  of  this  section,  but  each  society  shall  be  held  to  be 
legally  solvent  so  long  as  the  funds  in  its  possession  are  equal  to 
or  in  excess  of  its  matured  liabilities. 

4.  Beginning  with  the  year  nineteen  hundred  and  fourteen,  a 
report  of  such  valuation  and  an  explanation  of  the  facts  concern- 
ing the  condition  of  the  society  thereby  disclosed  shall  bo  printed 
and  mailed  to  each  beneficiary  member  thereof  not  later  than 
June  first  of  each  year,  or,  in  lieu  thereof,  such  report  of  valua- 
tion and  showing  of  the  society's  condition  as  thereby  disclosed 
may  be  published  in  the  society's  ofiicial  paper  and  the  issue  con- 
taining the  same  be  mailed  to  each  such  beneficiary  member.  The 
laws  of  such  society  shall  provide  that,  if  the  stated  periodical 
contributions  of  the  members  are  insufiicient  to  pay  all  matured 
death  and  disability  claims  in  full  and  to  provide  for  the  creation 
and  maintenance  of  the  funds  required  by  its  laws,  or  found 
necessary  otherwise,  additional  contributions,  or  additional, 
increased  or  extra  rates  of  contribution  shall  be  collected  from  the 
members  to  meet  such  deficiency;  and  such  laws  may  provide^ 
that,  upon  the  written  application  or  consent  of  a  member  his  cer- 
tificate may  be  charged  with  its  proportion  of  any  deficiency  dis- 
closed by  valuation,  with  interest  not  exceeding  five  per  centum 
per  annum. 

5.  If  the  valuation  of  the  certificates,  as  hereinbefore  provided, 
on  December  thirty-first,  nineteen  hundred  and  seventeen,  shall 
show  that  the  present  value  of  future  net  contributions,  together 
with  the  admitted  assets,  is  less  than  the  present  value  of  the 
promised  benefits  and  accrued  liabilities,  such  society  shall  there- 
after maintain  said  financial  condition  at  each  succeeding  triennial 
valuation  in  respect  of  the  degree  of  deficiency  as  shown  in  the 


§   242.  Fratei^nal    Hi  ^kfit  Societies.  37*5 

valuation  as  of  December  thirty-first,  nineteen  hundred  and  seven- 
teen. If,  at  any  succeeding  triennial  valuation,  such  society  does 
not  show  at  least  the  same  condition  the  superintendent  shall 
direct  that  it  thereafter  comply  with  the  requirements  herein 
specified.  If  the  next  succeeding  triennial  valuation  after  the 
receipt  of  such  notice  shall  show  that  the  society  has  failed  to 
maintain  the  said  condition  required  herein,  the  super- 
intendent may,  in  the  absence  of  good  cause  shown  for 
such  failure,  institute  proceedings  for  the  liquidation  and 
dissolution  of  such  society,  in  accordance  with  the  pro- 
visions of  section  sixty-three  of  this  chapter,  or,  in  the  case  of  a 
foreign  society,  he  may  cancel  its  license  to  transact  business  in 
this  state;  provided  that  nothing  contained  in  section  sixty-three 
of  this  chapter  shall  be  construed  to  authorize,  prior  to  December 
thirty-first,  nineteen  hundred  and  seventeen,  any  application  for 
the  possession  or  liquidation  of  any  society  organized  or  transact- 
ing business  pursuant  to  the  provisions  of  this  article  by  reason  of 
the  fact  that  the  condition  of  such  society  is  found,  after  examina- 
tion, to  be  such  that  it  could  not  meet  the  requirements  for  incor- 
poration and  authorization  specified  in  this  article. 

6,  Any  such  society  shown  by  any  triennial  valuation,  subse- 
quent to  December  thirty-first,  nineteen  hundred  and  seventeen, 
not  to  have  maintained  the  condition  herein  required  shall,  within 
two  years  thereafter,  make  such  improvement  as  to  show  a  percent- 
age of  deficiency  not  greater  than  as  of  December  thirty-first,  nine- 
teen hundred  and  seventeen,  or,  thereafter,  as  to  all  new  members 
admitted,  be  subject,  so  far  as  stated  rates  of  contribution  are  con- 
cerned, to  the  provisions  of  section  two  hundred  and  thirty-four  of 
this  article  applicable  to  the  organization  of  new  societies;  pro- 
vided that  the  net  mortuary  and  beneficiary  contributions  and 
funds  of  such  new  members  shall  be  kept  separate  and  apart  from 
the  other  funds  of  the  society.  If  such  required  improvement  is 
not  shown  by  the  succeeding  triennial  valuation,  then  the  said 
new  members  may  be  placed  in  a  separate  class,  and  their 
certificates  valued,  in  respect  to  contributions  and  funds,  as  an 
independent  society. 

7.  In  lieu  of  the  foregoing  requirements,  any  society  may 
accept  in  its  laws  the  following  provisions  and  may  value  its 
certificates  on  a  basis,  herein  designated  "accumulation  basis," 
by  crediting  each  member  with  the  net  amount  contributed  for 


37G  The  Insurance  Law.  §  242. 

each  year  and  with  interest  at  approximately  the  net  rate  earned, 
and  by  charging  him  with  his  share  of  the  losses  for  each  year, 
herein  designated  '^  cost  of  insurance,"  and  carrying  the  balance, 
if  any,  to  his  credit.  The  charge  for  the  cost  of  insurance  may 
be  according  to  the  actual  experience  of  the  society  applied  to  a 
table  of  mortality  recognized  by  the  law  of  this  state,  and  shall 
take  into  consideration  the  amount  at  risk  during  each  year,  which 
shall  be  the  amount  payable  at  death  less  the  credit  to  the  member. 
Except  as  specifically  provided  in  its  articles  or  laws  or  contracts 
no  charge  shall  be  carried  forward  from  the  first  valuation  here- 
under against  any  member  for  any  past  share  of  losses  exceeding 
the  contributions  and  credit.  If,  after  the  first  valuation,  any 
member's  share  of  losses  for  any  year  exceeds  his  credit,  including 
the  contribution  for  the  year,  the  contribution  shall  be  increased 
to  cover  his  share  of  the  losses.  Any  such  excess  share  of  losses 
chargeable  to  any  member  may  be  paid  out  of  a  fund  or  contribu- 
tions especially  created  or  required  for  such  purpose. 

Any  member  may  transfer  to  any  plan  adopted  by  the  society 
with  net  rates  on  which  tabular  reserves  are  maintained  and  on 
such  transfer  shall  be  entitled  to  make  such  application  of  his 
credit  as  provided  in  the  laws  of  the  society. 

Certificates  issued,  rerated  or  readjusted  on  a  basis  providing 
for  adequate  rates  with  adequate  reserves  to  mature  such  certifi- 
cates upon  assumptions  for  mortality  and  interest  recognized  by 
the  law  of  this  state  may  be  valued  on  such  basis,  herein  desig- 
nated the  "  Tabular  basis ;  "  provided  that  if  on  the  first  valua- 
tion under  this  section,  a  deficiency  in  reserve  shall  be  shown  for 
any  such  certificate,  the  same  shall  be  valued  on  the  accumulation 
basis. 

Whenever  in  any  society  having  members  upon  the  tabular 
basis  and  upon  the  accumulation  basis,  the  total  of  all  costs  of  in- 
surance provided  for  any  year  shall  be  insufiicient  to  meet  the 
actual  death  and  disability  losses  for  the  year,  the  deficiency 
shall  be  met  for  the  year  from  the  available  funds  after  setting 
aside  all  credits  in  the  reserve;  or  from  increased  contributions 
or  by  an  increase  in  the  number  of  assessments  applied  to  the  so- 
ciety as  a  whole  or  to  classes  of  members  as  may  be  specified 
in  its  laws.  Savings  from  a  lower  amount  of  death  losses  may 
be  returned  in  like  manner  as  may  be  specified  in  its  laws. 

If  the  laws  of  the  society  so  provide,  the  assets,  representing 
the  reserves  of  any  separate  cla&s  of  members  may  be  carried  sepa- 


J 


§   243.  Fkatkkaal  Benefit  Socities.  3'77 

rately  for  such  class  as  if  in  an  independent  society,  and  re- 
quired reserve  accumulation  of  such  class  so  set  apart  shall  not 
thereafter  be  mingled  with  the  assets  of  other  classes  of  the  society. 

A  table  showing  the  credits  to  individual  members  for  each 
age  and  year  of  entry  and  showing  opposite  each  credit  the  tabu- 
lar reserve  required  on  the  whole  life  or  other  plan  of  insurance 
specified  in  the  contract,  according  to  assumptions  for  mortality 
and  interest  recognized  by  the  law  of  this  state  and  adopted  by 
the  society,  shall  be  filed  by  the  society  with  each  annual  report, 
and  also  be  furnished  to  each  member  before  July  first  of  each 
year. 

In  lieu  of  the  aforesaid  statement  there  may  be  furnished 
to  each  member  within  the  same  time  a  statement  giving  the 
credit  for  such  member  and  giving  the  tabular  reserve  and  level 
rate  required  for  a  transfer  carrying  out  the  plan  of  insurance 
specified  in  the  contract.  No  table  or  statement  need  be  made  or 
furnished  where  the  reserves  are  maintained  on  the  tabular  basis. 

For  this  purpose  individual  bookkeeping  accounts  for  each 
member  shall  not  be  required  and  all  calculations  may  be  made  by 
actuarial  methods. 

E'othing  herein  contained  shall  prevent  the  maintenance  of  such 
surplus  over  and  above  the  credits  on  the  accumulation  basis  and 
the  reserves  on  the  tabular  basis  as  any  society  may  provide  by 
or  pursuant  to  its  laws;  nor  be  construed  as  giving  to  the  indi- 
vidual member  any  right  or  claim  to  any  such  reserve  or  credit 
other  than  the  manner  as  expressed  in  the  contract  and  its  laws ; 
nor  as  making  any  such  reserve  or  credits  a  liability  in  determin- 
ing the  legal  solvency  of  the  society. 

Added  by  L.  1911,  chap.  198. 

Amended  by  L.  1913,  chap.  410,  and  L.  1914,  chap.  203.  In  effect  April  7, 
1914. 

The  purpose  of  the  amendment  of  subdivision  2  of  this  section  by  chapter 
203  of  1914,  was  to  provide  that  any  excess  of  the  present  vakie  of  future 
contributions  over  the  present  value  of  promised  benefits  under  certificates 
providing  for  disability  benefits  (other  than  total  permanent  disability  in 
combination  with  death  benefits)  should  not  be  allowed  in  reduction  of  the 
liability  under  other  forms  of  certificates;  and  to  terminate  the  limitation  in 
the  law  of  1913,  authorizing  .the  organization  of  certain  voluntary 
associations.  * 

§  243.    Examinations. 

1.  The  superintendent  of  insurance,  or  any  deputy,  examiner 
or  other  person  whom  he  shall  appoint,  shall  have  the  power  of 


378  The  Insurance  Law.  §  243. 

visitation  and  examination  into  the  affairs  of  any  domestic 
society.  He  may  employ  assistants  for  the  purpose  of  such 
examination,  and  he,  or  any  person  he  may  so  appoint,  shall  have 
free  access  to  all  the  books,  papers  and  documents  that  relate  to 
the  business  of  the  society,  and  may  summon,  qualify  as  witnesses 
under  oath  .and  examine  its  officers,  agents  and  employees  or  other 
persons  in  relation  to  the  affairs,  transactions  and  condition  of  the 
society. 

2.  The  superintendent  of  insurance,  or  any  deputy,  examiner 
or  other  person  whom  he  shall  appoint,  may  examine  any  foreign 
society  transacting,  or  .applying  for  admission  to  trans-act  busi- 
ness in  this  state.  The  said  superintendent  may  employ  assist- 
ants, and  he  or  any  person  so  appointed  shall  have  free  access 
to  all  the  books,  papers  and  documents  that  relate  to  the 
business  of  the  society,  and  may  summon,  qualify  as  witnesses 
under  oath  and  examine  its  officers,  agents  and  employees  or  other 
persons  in  relation  to  the  affairs,  transactions  and  condition  of  the 
society.  Such  superintendent  may,  in  his  discretion,  accept,  in 
lieu  of  said  examination,  the  examination  of  the  insurance  de- 
partment of  the  state,  territory,  district,  province  or  country 
wherein  such  society  is  organized.  If  any  such  society  or  its 
officers  refuse  to  submit  to  such  examination  or  to  comply  with 
the  provisions  of  the  section  relative  thereto,  the  authority  of  such 
society  to  write  new  business  in  this  state  shall  be  suspended  or 
its  license  refused  until  satisfactory  evidence  is  furnished  tlie 
superintendent  as  to  the  condition  and  affairs  of  the  society,  and 
during  such  suspension,  the  society  shall  not  write  new  business 
in  this  state. 

3.  Except  for  the  purpose  of  instituting  proceedings  under  sec- 
tion sixty-three  of  this  chapter,  pending,  during  or  after  an  exam- 
ination or  investigation  of  any  such  society,  either  domestic  or 
foreign,  the  superintendent  of  insurance  shall  make  public  no 
financial  statement,  report  or  finding,  nor  shall  he  permit  to  be- 
come public  any  financial  statement,  report  or  finding  affecting 
the  status,  standing  or  rights  of  any  such  society,  until  a  copy 
thereof  shall  have  been  mailed  to  such  society,  at  its  home  office, 
nor  until  such  society  shall  have  been  afforded  a  reasonable  op- 


§§  244,  245.        Featebnal  Bknefit  Socities.  37'9 

portunity  to  answer  any  sucli  financial  statement,  report  or  find- 
ing and  to  make  such  showing  in  connection  therewith  as  it 
may  desire. 

Added  by  L.  1911,  chap.  198 

§  244.    Revocation  of  license. 

When,  upon  investigation,  the  superintendent  of  insurance  is 
satisfied  that  any  foreign  society  transacting  business  under  this 
article  has  exceeded,  its  powers,  or  has  failed  to  comply  with  any 
provisions  of  this  article,  or  is  conducting  business  fraudulently 
or  in  a  way  hazardous  to  its  members,  creditors  or  the  public,  or 
is  not  carrying  out  its  contracts  in  good  faith,  he  shall  notify  the 
society  of  his  findings,  stating  in  writing  the  grounds  of  his  dis- 
satisfaction, and,  after  reasonable  notice,  require  said  society,  on 
a  date  named,  to  show  cause  why  its  license  should  not  be  re- 
voked. If,  on  the  date  named  in  said  notice,  such  objections  have 
not  been  removed  to  the  satisfaction  of  the  said  superintendent, 
or  if  the  society  does  not  present  good  and  suificient  reasons  why 
its  authority  to  transact  business  in  this  state  should  not  at  that 
time  be  revoked,  he  may  revoke  the  authority  of  the  society  to 
continue  business  in  this  state. 

A.dded  by  L.  1911,  chap.  198. 

§  245.    Exemption  of  certain  societies. 

ISTothing  contained  in  this  article  shall  be  so  construed  as  to 
affect  or  apply  to  grand  or  subordinate  lodges  of  Masons,  Odd 
Fellows,  Knights  of  Pythias  (exclusive  of  the  insurance  depart- 
ment of  the  supreme  lodge  Knights  of  Pythias),  the  l^ew  York 
City  Police  Endowment  Association  and  the  Lieutenants'  Benevo- 
lent Association,  or  to  similar  societies,  orders  or  associations  now 
doing  business  in  this  state  which  provide  benefits  exclusively 
through  local  or  subordinate  lodges,  or  to 

(a)  Orders,  societies  or  associations  which  limit  their  admission 
to  membership  to  any  one  hazardous  occupation; 

(b)  Domestic  societies  which  limit  their  membership  to  the  em- 
ployees of  a  particular  city  or  town,  designated  firm,  business 
house  or  corporation  which  provide  for  a  death  benefit  of  not  more 
than  four  hundred  dollars  or  disability  benefits  of  not  more  than 


380  The  Insurance  Law.  §  245. 

three  nundred  and  fifty  dollars  to  any  one  person  in  any  one  year 
or  both; 

(c)  Domestic  societies  or  associations  of  a  purely  religious, 
charitable  and  benevolent  description,  which  provide  for  a  death 
benefit  of  not  more  than  four  hundred  dollars  or  for  disability 
benefits  of  not  more  than  three  hundred  and  fifty  dollars  to  any 
one  person  in  any  one  year,  or  both. 

Provided,  however,  that  any  such  society  or  association  de- 
scribed in  subdivisions  b  and  c,  which  provides  for  death  or  dis- 
ability benefits  for  which  certificates  are  issued,  and  any  such  so- 
ciety or  association  included  in  subdivision  c  which  has  more  than 
one  thousand  members,  shall  not  be  exempted  from  the  provisions 
of  this  section  or  chapter,  but  shall  comply  with  all  the  require- 
ments thereof,  and,  provided  further,  that  nothing  in  subdivisions 
(a)  and  (b)  of  subsection  one  of  section  two  hundred  and  thirty- 
one  of  this  chapter,  and  subsections  two,  three,  four,  ^ve,  six  and 
seven  of  section  two  hundred  and  forty-two  of  this  chapter  shall 
affect  or  apply  to  the  Independent  Order  Free  Sons  of  Israel  or 
to  any  corporation,  society,  order  or  voluntary  association,  which 
was,  prior  to  the  first  day  of  March,  nineteen  hundred  and  eleven, 
organized  and  doing  business  in  this  state  on  the  lodge  system,  as 
provided  in  subsection  two  of  section  two  hundred  and  thirty  of 
this  chapter  which  does  not  issue  death  benefit  certificates  in  a 
sum  exceeding  five  hundred  dollars  to  any  one  member  and  whose 
membership  is  confined  and  limited  exclusively  to  persons  of  one 
particular  faith. 

ISTo  society  which,  by  the  provisions  of  this  section,  is  exempt 
from  the  requirements  of  this  article  or  chapter,  except  any  so- 
ciety described  in  subdivision  a,  shall  give  or  allow,  or  promise 
to  give  or  allow,  to  any  person  any  compensation  for  procuring 
new  members. 

The  superintendent  of  insurance  may  require  from  any  society 
or  association,  by  examination  or  otherwise,  such  information  as 
will  enable  him  to  determine  whether  such  society  or  association  is 
exempt  from  the  provisions  of  this  article  or  chapter. 

Any  fraternal  benefit  society  heretofore  organized  and  incor- 
porated and  operating  within  the  definitions  set  forth  in  section 
two  hundred  and  thirty  of  this  article  providing  for  benefits  in 
case  of  death  or  disability  resulting  solely  from  accidents,  but 
which  does  not  obligate  itself  to  pay  death  or  sick  benefits,  may  be 
licensed  under  the  provisions  of  this  article  and  shall  have  all  the 


§  246.  Fraternal  Benefit  Socities.  381 

privileges  and  be  subject  to  all  the  provisions  and  regulations  of 
this  article,  except  that  the  provisions  thereof  requiring  medical 
examinations^  valuations  of  benefit  certificates,  and  that  the  cer- 
tificates shall  specify  the  amount  of  benefits,  shall  not  apply  to 
such  society. 

Added  by  L.  1911,  ohap.  198. 

Amended  by  L.  1913,  oliap.  410;  L.  1914,  chap.  203,  and  L.  1915,  ehap.  476. 
In  effect  May  3,   1915. 

The  amendment  of  1915  added  "  the  New  York  City  Police  Endowment 
Association  and  the  Lieutenants'  Benevolent  Association "  in  the  first 
paragra.ph. 

The  purpose  of  the  amendment  of  this  section  by  chapter  203  of  1914  was 
to  provide  that  any  excess  of  the  present  value  of  future  contributions  over 
the  present  value  of  promised  benefits  under  certificates  providing  for  disa- 
bility benefits  (other  then  total  permanent  disability  in  combination  with 
death  benefits)  should  not  be  allowed  in  reduction  of  the  liability  under  other 
forms  of  certificates;  and  to  terminate  the  limitation  in  the  law  of  1913, 
authorizing  the  organization  of  certain  voluntary  associations. 

A  voluntary  association  of  a  benevolent  description,  having  less  than  five 
hundred  members,  organized  in  this  State  thirteen  years  ago  and  doing  busi- 
ness here  at  the  time  chapter  198  of  1911  went  into  effect,  and  providing  for 
a  death  benefit  of  not  more  than  one  hundred  dollars  and  a  disability  benefit 
of  not  more  than  one  ihundred  and  fifty  dollars  to  any  one  person  in  any  one 
year  is  exempt  from  the  provisions  of  article  VII  of  the  Insurance  Law. 
Attorney-General  Rep.,  Oct.  31,  1911. 

Membership  corporations  organized  pursuant  to  the  Membership  Law  and 
engaged  in  the  business  of  rendering  aid  to  members  limited  to  the  amount 
specified  in  subdivision  "c "  of  §  245  of  the  Insurance  Law,  are  prohibited 
from  advertising  the  furnishing  of  insurance  benefits  generally.  Attorney- 
General  Rep.,  June  2,  1914. 

They  are  not  presumed  to  deal  with  the  public  generally,  but  such  business 
is  merely  incident  to  the  business  of  the  corporations.  Such  corporations 
may  issue  certificates  of  membership  to  members  in  which  there  appears  a 
description  of  the  benefits  promised  for  the  amounts  paid.  Attorney-General 
Rep.,  1914,  page  83. 

The  right  of  an  unauthorized  foreign  fraternal  beneficiary  society  to  do 
business  in  this  state  depends  upon  the  question  of  whether  said  society  falls 
within  the  first  provisions  of  section  245,  and  that  the  amount  of  benefits 
paid  applies  only  to  associations  of  local  lodges  of  a  society  now  doing  busi- 
ness in  the  state  and  to  domestic  lodges  of  a  purely  charitable  and  benevolent 
description.     Attorney-General  Rep.,  July  31,  1911. 

§  246.    Taxation. 

Every  fraternal  benefit  society  organized  or  licensed  under  this 
article  is  hereby  declared  to  be  a  charitable  and  benevolent  in- 
stitution, and  all  of  its  funds  shall  be  exempt  from  all  and  every 


382  The  Insurance  Law.  §  247. 

state,  county,  district,  municipal  and  school  tax,  other  than  taxes 
on  real  estate  and  office  equipment. 
Added  by  L.  1911,  chap.  198. 

§  247.    Penalties. 

1.  Any  person,  officer,  member  or  examining  physician  of  any 
society  authorized  to  do  business  under  this  article,  who  shall 
knowingly  or  willfully  make  any  false  or  fraudulent  statement  or 
representation  in  or  with  reference  to  any  application  for  mem- 
bership, or  for  the  purpose  of  obtaining  money  from  or  benefit  in 
any  society  transacting  business  under  this  article,  shall  be  guilty 
of  a  misdemeanor  .and,  upon  conviction  thereof,  shall  be  punished 
by  a  fine  of  not  less  than  one  hundred  dollars  nor  more  than  five 
hundred  dollars,  or  imprisonment  in  the  county  jail  for  not  less 
than  thirty  days  nor  more  than  a  year,  or  both,  in  the  discretion 
of  the  court;  and  any  person  who  shall  willfully  make  a  false 
statement  of  any  material  fact  or  thing  in  a  sworn  statement  as  to 
the  death  or  disability  of  a  certificate  holder  in  any  such  society, 
for  the  purpose  of  procuring  payment  of  a  benefit  named  in  th«^ 
certificate  of  such  holder,  or  any  person  who  shall  willfully  make 
any  false  statement  in  any  verified  report  or  declaration  under 
oath,  required  or  authorized  by  this  article,  shall  be  guilty  of  per- 
jury and  shall  be  proceeded  against  and  punished  as  provided  by 
the  statutes  of  this  state  in  relation  to  the  crime  of  perjury. 

2.  Any  person  who  shall  solicit  membership  for,  or  in  any  man- 
ner assist  in  procuring  membership  in,  any  fraternal  benefit  so- 
ciety not  licensed  to  do  business  in  this  state,  or  who  shall  solicit 
membership  for,  or  in  any  manner  .assist  in  procuring  member- 
ship in,  any  such  society  not  authorized  as  herein  provided  to  do 
business  as  herein  defined  in  this  state,  shall  be  guilty  of  a  mis- 
demeanor and,  upon  conviction  thereof,  shall  be  punished  by  a 
fine  of  not  less  than  fifty  nor  more  than  two  hundred  dollars. 

3.  Any  society,  or  any  officer,  agent  or  employee  thereof,  neg- 
lecting or  refusing  to  comply  with  or  violating  any  of  the  pro- 
visions of  this  article,  the  penalty  for  which  neglect,  refusal  or 
violation  is  not  specified  in  this  section,  shall,  upon  conviction 
thereof,  be  fined  not  exceeding  two  hundred  dollars. 

Added  by  L.  1911,  chap.  198. 


§§  248,  249.       Fraternal  Benefit  Socities.  ^         38-3 

§  248.    Application  of  other  sections  of  this  chapter. 

Sections  six,  seven,  nine,  ten,  thirty-five,  thirty-six,  forty-seven 
and  sixty-three  of  this  chapter  are  hereby  made  specifically  ap- 
plicable to  any  corporation,  society,  order  or  voluntary  associa- 
tion described  in,  and  transacting  or  seeking  authority  to  trans- 
act the  business  of  insurance  in  this  state  authorized  by,  the  pro- 
visions of  article  seven  of  this  chapter. 

Added  by  L.  1911,  chap.  198. 

§  249.    Review. 

All  decisions  and  findings  of  the  superintendent  of  insurance 
made  under  the  provisions  of  this  article  and  all  other  sections  of 
this  chapter  made  applicable  thereto  may  be  reviewed  by  proper 
proceedings  in  any  court  of  competent  jurisdiction. 

Added  by  L.  1911,  chflp.  198. 


384  The  Insurance  Law.  §  250. 

ARTICLE  VIIL 

Corporations  for  Insurance  of  Domestic  Animals. 

Section  250.  Incorporation. 

251.  Annual  meeting;  election  of  directors. 

252.  Annual  report. 

253.  Examinations;  when  corporation  may  be  restrained  from  doing 

business. 

254.  Assessments. 

Section  250.    Incorporation. 

Nine  or  more  persons  may  become  a  corporation  for  the  purpose 
of  insuring  the  lives  of  domestic  animals,  upon  the  co-operative  or 
assessment  plan  of  insurance,  by  making,  acknowledging  and  filing 
in  the  office  of  the  superintendent  of  insurance,  a  declaration  stat- 
ing their  intention  to  form  such  corporation ;  the  name  by  which  it 
shall  be  known;  the  place  where  its  office  shall  be  located  within 
this  state;  its  particular  business  and  objects;  its  duration,  not 
tf;  exceed  thirty  years ;  the  number  of  its  directors,  not  less  than 
five  nor  more  than  thirteen,  who  shall  manage  its  affairs,  and  the 
names  and  post-office  addresses  of  the  directors  for  the  first  year  of 
its  existence,  with  a  swora  statement  by  two  or  more  of  such  per- 
sons, that  at  least  fifty  persons  eligible  to  membership  have  applied 
in  good  faith,  in  writing,  for  membership  and  insurance  in  such 
corporation,  to  the  amount  of  at  least  ten  thousand  dollars,  and  have 
severally  in  good  faith  paid  in  in  cash  the  regular  premiums  there 
for,  and  admission  or  membership  fees  in  accordance  with  the  by- 
laws of  such  corporation.  If  the  requirements  of  this  chapter  have 
been  complied  with,  the  superintendent  shall  file  such  declaration, 
statement  and  certificate,  and  cause  the  same  to  be  recorded  in  a 
book  to  be  kept  for  that  purpose,  and  shall  deliver  to  such  corpora- 
tion a  certified  copy  of  the  papers  so  filed  and  recorded,  with  hia 
license  to  the  corporation  to  engage  in  the  business  proposed  in 
such  declaration.  Upon  such  certified  copy  and  license  being  filen 
in  the  office  of  the  clerk  of  the  county  where  the  corporation  is  to  be 
located,  such  persons  and  those  that  may  tliereafter  be  associated 


§  250.  Insurance  of  Domestic  Animals.  385 

with  them,  or  their  successors,  shall  be  a  corporation  and  authorized 
to  coramence  and  carry  on  such  business.  Provided,  however,  that 
no  such  corporation  shall  be  formed,  and  no  such  license  shall  be 
issued  by  the  superintendent  of  insurance  after  July  first,  nineteen 
hundred  and  ten. 

Source. — Former  §  250;  originally  revised  from  L.  1889,  chap.  454,  §§  1-3. 

Amended  by  chapter  318  of  1910. 

Section  3  of  chapter  318  of  1910  provides: 

§  3.  This  act  shall  take  eflFect  immediately,  provided  that  at  any  time  after 
the  passage  and  approval  of  tliis  act,  and  upon  July  first,  nineteen  hundred  and 
ten,  the  superintendent  of  insurance  may  refuse  to  issue  any  license  under 
section  two  hundred  and  fifty  of  said  chapter,  if  in  his  judgment  such  refusal 
will  promote  the  interest  of  the  people  of  the  state. 

See  §  C,  ante.     Fees  to  superintendent  for  filing  papers. 

See  §  9,  ante.    Certificate  of  authorization  by  superintendent. 

See  §  10,  ante.  Certificate  of  attorney-general,  corporate  names,  number  of 
directors. 

See  §  11,  ante.  Examination  by  superintendent  as  to  payment  of  capital 
stock,  etc. 

See  §  60  et  seq.,  General  Corporation  Law.  Proceedings  to  change  the  name 
of  a  corporation. 

See  §  195,  Penal  Law.  Misconduct  of  agents  of  corporations  to  insure 
domestic  animals. 

See  chap.  733  of  1900.    Reincorporation  of  foreign  money  corporations. 

DIRECTORS. —  A  quorum  of  directors  must  be  a  majority  of  all  the  directors 
unless  otherwise  provided  in  charter  or  special  law.  By-laws  cannot  change 
this  rule.    Attorney-General  Rep.,  1900,  page  253. 

ACKNOWLEDGMENT.— The  certificate  of  organization  of  co-operative 
insurance  companies  must  be  acknowledged  by  nine  or  more  incorporators. 
Attorney-General  Rep.,  1892,  page  442. 

TRANSFER   OF   CORPORATE   RIGHTS.— There   is    no    provision   in   the 
Insurance   Law  which   warrants   the  transfer  of  corporate   rights  and  fran- 
chises to  an  individual  acting  as  general  agent  in  another  state.    Attorney 
General  Rep.,  1896,  page  276. 

ANIMALS  LOST  BY  FIRE. —  A  co-operative  live  stock  insurance  company 
organized  under  article  VIII  of  the  Insurance  Law  is  liable  for  the  death  of  an 
animal  which  results  from  a  fire.  O'Grady  v.  N.  Y.  Mut.  Live  Stock  Ins.  Co., 
16  App.  Div.,  567;  44  N.  Y.  Supp.,  946. 

DOMESTIC  ANIMALS. —  A  corporation  authorized  to  insure  the  lives  of 
domestic  animals  may  insure  the  lives  of  such  animals  in  transportation  over 
the  Atlantic  ocean,  but  has  no  right  to  transfer  such  a  policy.  Attorney- 
General  Rep.,  1897,  page  114. 

Fire  insurance  companies  cannot  be  incorporated  under  article  VIII,  but  can 
under  article  IX,  to  insure  against  loss  of  domestic  animals  by  fire.  Attorney- 
General  Rep.,  1893,  page  317. 


386  The  Insueance  Law.  §§  251,  252. 

§  251.    Annual  meeting;  election  of  directors. 

Every  such  corporation  shall  hold  within  the  county  m  which 
its  office  is  located,  a  stated  annual  meeting  of  its  members  in  such 
majiner  and  subject  to  such  regulations  as  its  constitution  or  by-laws 
may  provide.  Notice  of  such  meeting  of  not  less  than  five  days 
shall  be  given  in  such  manner  as  the  by-laws  may  direct  The  di- 
rectors named  in  such  declaration  shall  hold  their  office  for  one  year 
and  until  others  are  elected  and  qualified,  and  directors  shall  be 
annually  elected  at  such  stated  meeting.  The  directors  shall  choose 
from  tlieir  number  a  president  and  secretary,  and  shall  appoint 
sucli  otlier  officers  as  their  by-laws  shall  prescribe.  At  the  stated 
annual  meeting,  a  majority  of  the  persons  entitled  to  vote  thereat 
shall  not  be  necessary  to  a  quorum,  and  if  the  meeting  shall  not  be 
held  on  die  day  designated  therefor,  it  may  be  held  on  a  subsequent 
«iay,  in  such  manner  as  may  be  directed  by  the  by-laws. 

Source. — Former  §  251;  originally  revised  from  L.  1889,  chap.  454,  §§4,  10. 

See  §  11,  subd.  5,  General  Corporation  Law,  chap.  28  of  1909.  Powers  of 
corporation  to  pass  by-laws;  election  of  directors. 

§  252.    Annual  report. 

Kvery  sucli  corporation  shall  annually,  on  or  before  March 
first,  make  and  file  with  the  superintendent  of  insurance  a  report 
for  the  year  ending  on  the  thirty-first  day  of  December  immedi- 
ately preceding,  verified  by  the  duly  authorized  officers  of  such 
corporation,  which  shall  state  the  date  of  its  organizatior .  the 
number  of  certificates  or  policies  issued  during  the  year  or  mem- 
bers admitted,  the  number  of  losses  paid  and  tlie  amount  paid  on 
each  loss,  the  amount  received  from  each  assessment  for  th^  year, 
the  number  of  claims  for  which  assessments  have  been  made,  the 
total  amount  received  for  benefit  fund  and  the  disposition  thereof, 
the  reserve  fund,  if  any,  and  its  amoimt,  the  number  of  policies 
or  memberships  lapsed  during  the  year,  the  number  in  force  at  the 
beginning  and  the  end  of  the  year.  ItTo  other  report,  and  no 
deposit  of  securities  with  the  superintendent,  shall  be  required  of 
the  corporation.  Any  corporation  refusing  or  neglecting  to  make 
such  report,  or  to  make  payment  of  any  fees  required  by  law, 
may,  upon  the  suit  of  the  attorney-general,  upon  the  recommenda- 


§  253.  Insueance  of  Domestic  Animals.  387 

tion  of  the  superintendent  of  insurance,  be  enjoined  by  the  supreme 

court  from  carrying  on  any  business  until  such  report  and  payment 

shall  be  made  and  the  costs  of  such  action  be  paid. 

Source.— Former  §  252;   originally  revised  from  L.  1889,  chap.  454,  §§  6,  7. 

See  §  1508  of  Penal  Law.  Failure  of  officers  of  companies  to  insure  domestic 
animals  to  make  report,  etc. 

§  253.  Examinations;  when  corporation  may  be  restrained 
from  doing  business. 

Every  such  corporation,  together  with  its  books,  papers  and 
vouchers,  shall  be  subject  to  visitation  and  inspection  by  the  super- 
intendent of  insurance,  or  such  person  as  he  may  designate.  When 
on  investigation,  the  superintendent  shall  be  satisfied  that  any 
such  corporation  has  exceeded  its  powers,  failed  to  comply  with 
any  provision  of  'aW;  or  is  conducting  business  fraudulently,  he 
shall  report  the  facts  to  the  attorney-general ;  who,  if  he  shall  be  of 
the  opinion  that  the  facts  require  such  action,  must  thereupon 
apply  to  the  supreme  court  at  a  special  term  thereof  within  the 
judicial  district  within  which  the  office  of  such  corporation  is 
located  for  an  order  requiring  its  officers  to  show  cause  at  a  time 
and  place  within  the  district  to  be  specified  in  the  order  why  it 
should  not  be  restrained  from  continuing  to  transact  business,  and 
the  court  may  adjourn  the  hearing  thereof  from  time  to  time  not 
exceeding  sixty  days  in  all. 

Upon  the  return  of  such  order  the  corporation  may  be  heard  and 
shall  be  entitled  to  a  trial  by  jury  of  the  facts  stated  in  the  report, 
if  the  same  shall  be  traversed  and  the  corporation  shall  demand  a 
trial  by  jury,  and  to  examine  papers  and  witnesses  under  oath  in 
the  usual  mode  of  trials  of  actions.  If  the  facts  thus  reported  shall 
be  established  by  the  finding  of  the  court  or  verdict  of  the  jury,  the 
court  may  thereupon  make  its  order  or  decree  closing  the  business 
of  the  corporation  and  appointing  a  receiver  for  the  distribution 
of  its  assets  among  its  members,  certificate  holders,  policy  holders 
and  creditors,  or  may  make  such  other  order  as  the  interests  of  the 
corporation  and  the  public  may  require. 

Pending  such  trial  the  court  may,  upon  the  motion  of  the  attor- 
^^y-general,  grant  an  injunction  order  restraining  the  corporation 


388  The  Insurance  Law.  §  254. 

and  its  directors  or  other  officers  from  collecting  any  debt  or  de- 
mand, and  from  paying  out  or  in  any  other  way  transferring  or 
delivering  to  any  person  any  money  or  property  of  the  corporation 
during  the  pendency  of  such  proceeding,  except  by  the  order  of 
the  court;  and  may  appoint  one  or  more  temporary  receivers  of 
the  property  of  the  corporation,  with  all  the  powers  of  such  re- 
ceivers; but  no  action  shall  be  maintained  to  restrain  or  dissolve 
any  such  corporation  except  by  the  attorney-general,  in  the  name 
and  in  behalf  of  the  people. 
Source. — Former  §  253;   originally  revised  from  L.  1889,  chap.  454,  §  8. 

§  254.    Assessments. 

Each  notice  of  assessment  made  by  any  such  corporation  upon 
its  members,  or  any  of  them,  shall  truly  state  the  cause  and  pur- 
poses of  such  assessment  and  the  amount  paid  on  the  last  loss 
claim  paid,  the  maximum  face  value  of  the  policy  or  certificate 
upon  which  such  claim  was  paid,  and  if  not  paid  in  full,  the 
reason  therefor.  The  manner  and  mode  of  making  such  assess- 
ments and  the  cost,  expense  and  collection  thereof  shall  be  regu- 
lated by  the  by-laws  of  the  corporation. 

Source. — Former  §  254;  originally  revised  from  L.  1889,  chap.  454,  §  11. 


§    2'60.  Co-OPEBATIVE    FlliE    INSURANCE    CORPORATIONS.         389 

.iETICLE  IX. 

Co-operative  Fire  Insurance  Corporations. 

Section  260.  Existing  corporations  continued. 

261.  Voluntary  associations  continued  and  incorporated. 

262.  Co-operative  fire  insurance  corporations;   general  provisions. 

263.  In;'orporation  and  certificate  of  authority. 

264.  By-laws. 

265.  Policies. 

266.  General  provisions  affecting  assessment  corporations  only. 

267.  General  provisions  affecting  advance  premium  corporations  only. 

268.  Application  of  other  sections  of  this  chapter. 

269.  Extension  of  corporate  existence. 

Section  260.    Existing  Corporations  continued. 

All  corporations  formed  pursuant  to  chapter  seven  hundred  and 
thirty-nine  of  the  laws  of  eighteen  hundred  and  fifty-seven,  chap- 
ter five  hundred  and  seventy-three  of  the  laws  of  eighteen  hundred 
and  eighty-six  or  the  laws  of  which  the  last  mentioned  chapter  wa^ 
a  consolidation,  and  article  nine  of  chapter  six  hundred  and  ninety 
of  the  laws  of  eighteen  hundred  and  ninety-two,  and  the  acts 
amendatory  of  any  thereof,  and  all  co-operative  fire  insurance 
corporations  organized  under  special  acts  of  the  legislature  which 
may  desire  to  become  subject  to  the  provisions  of  this  article  and 
which  have  heretofore  filed  or  shall  hereafter  file  with  the  super- 
intendent of  insurance  the  papers  specified  in  this  section,  are 
hereby  continued  in  existence  and  made  subject  to  the  provisions 
of  this  article  and  not  to  -any  other  provisions  of  this  chapter,  un- 
less made  specifically  applicable  thereto.  Each  such  corporation 
shall,  unless  it  has  already  filed  with  the  superintendent  of  insur- 
ance the  papers  hereinafter  provided,  file  with  the  superintendent 
of  insurance,  not  later  than  December  thirty-first,  nineteen  hun- 
dred and  eleven,  copies  of  its  certificate  of  incorporation,  or  if 
organized  under  a  special  act,  copies  of  its  incorporating  act  and 
by-laws  in  force  at  the  time  of  such  filing,  duly  verified  by  its 
president  and  secretary  by  affidavits  to  the  effect  that  the  same 
are  true  copies.  When  it  shall  be  made  to  appear  to  the  satisfac- 
tion of  the  superintendent  of  insurance  that  the  certificate  of  in- 
corporation of  any  such    corporation  has  been  lost  or  destroyed 


390  The  Insurance  Law.  §  260. 

and  that  a  copy  thereof  cannot  be  filed  as  hereinabove  provided, 
the  superintendent  of  insurance  may  permit  the  filing,  in  lieu  of 
such  certificate  of  incorporation,  of  a  statement,  verified  by  the 
oath  of  its  president  and  secretary,  which  shall  set  forth  the  facts 
preventing  the  filing  of  a  copy  of  such  certificate  of  incorporation 
and  show  the  character  and  mode  of  transacting  business  employed 
by  such  corporation.  On  the  filing  of  such  papers,  so  verified, 
the  superintendent  of  insurance,  if  in  his  judgment  such  cor- 
poration will  safely  conduct  the  business  of  insurance  in  this 
state,  shall  issue  to  such  corporation  a  certificate  authorizing  it 
to  continue  in  the  business  of  insurance  in  this  state  of  the  kind 
specified  in  such  by-laws  and  within  the  territory  in  which  it  does 
business  at  the  time  of  such  filing,  provided  that  such  business 
and  territory  are  not  in  conflict  or  inconsistent  with  the  terms  of 
this  article;  provided,  further,  that  any  such  corporation  which 
has  not  yet  received  a  certificate  of  authority  as  hereinabove 
provided  is  hereby  authorized  to  continue  the  business  previously 
conducted  by  it  to  and  until  December  thirty-first,  nineteen 
hundred  and  eleven,  but  no  such  corporation  shall  continue 
such  business  without  such  certificate  after  December  thirty-first, 
nineteen  hundred  and  eleven;  and  provided  further,  that  the 
policies  of  any  such  corporation  issued  heretofore  or  at  any  time 
prior  to  the  issue  of  said  certificate  shall  be  as  valid  and  the  rights 
and  powers  of  the  ofiicers  and  members  of  such  corporation  shall 
be  the  same  in  all  respects  as  if  such  corporation  had  been  origi- 
nally organized  under  this  article.  All  acts  of  the  superintendent 
of  insurance  since  the  first  day  of  September,  nineteen  hundred 
and  ten,  in  issuing  certificates  of  authority  to  co-operative  fire 
insurance  corporations  to  which  the  provisions  of  this  article  are 
applicable  are  hereby  validated,  legalized  and  confirmed  and  all 
corporations  which  have  received  such  certificates  are  hereby 
made  and  declared  to  be  legal  corporations  and  subject  to  the 
provisions  of  this  article,  notwithstanding  any  irregularity,  infor- 
mality or  defect  in  the  certificates  of  incorporation  or  other  papers 
filed,  upon  which  such  certificates  of  authority  were  issued. 

Added  by  L.  1910,  chap.  328,  and  amended  by  L.  1911,  chap.  323. 
A  co-operative  fire  insurance  company  may  not,  prior  to  the  issue  of  the  cer« 
tificate  mentioned  in  §  260,  extend  its  business  immediately,  upon  filing  the 


§  26,1.        Co-operative  Fiee  Insurance  Corpoeations.       391 

statement  mentioned  in  §  262,  as  amended  by  L.  1910,  chap.  328.    Attorney- 
General  Rep.,  Nov.  15,  1910. 

The  filing  of  copies  of  by-laws  alone  by  corporation  or  voluntary  associa- 
tions is  not  sufficient,  and  there  must  be  filed  copies  of  the  original  articles 
of  association,  duly  verified;  co-operative  companies  which  are  unable  to  obtain 
th«ir  certificates  of  incorporation,  (a)  companies  regularly  organized  under 
some  statute  of  the  state,  may  not  reorganize  under  section  52  for  the  purpose 
of  furnishing  themselves  with  a  charter  of  which  to  make  proof  to  entitle 
them  to  a  certificate  of  authority  and  (b)  companies  whose  officials  believe 
they  were  incorporated,  but  are  unable  to  prove  they  are  existing  corpora- 
tions, may  not  be  treated  as  voluntary  associations  unless  they  were  such 
when  the  act  took  effect  and  must  furnish  verified  copies  of  their  original 
articles  of  association.     Attorney-General  Rep.,  Aug.   25,  1910. 

If  companies  organized  under  chap,  287,  L.  1878,  chap.  326,  L.  1880,  and 
chap.  573,  L.  1886,  are  unable  to  file  either  (1)  copies  of  the  certificate  of 
intention  or  (2)  copy  duly  verified  of  the  statement  referred  to  in  the  law 
under  which  incorporated,  they  may  obtain  a  certificate  under  section  261  of 
the  Insurance  Law  oj^ly  by  satisfying  the  superintendent  that  they  were 
voluntary  associations  which  at  the  time  the  act  took  effect  were  doing  busi- 
ness, etc.,  and  furnishing  copies  of  the  original  articles  of  association  and 
by-laws  in  force  at  the  time  of  such  application,  duly  verified.  Attorney- 
Genera]   Rep.,  Aug.    19,  1910. 

§  261.    Voluntary  associations  continued  and  incorporated. 

All  voluntary  associations  which  were  on  the  first  day  of  July, 
nineteen  hundred,  and  ten,  doing  in  this  state  an  insurance  busi- 
ness of  the  kind  and  on  a  plan  similar  to  those  of  the  c^^'ix orations 
specified  in  section  two  hundred  and  sixty  of  this  chapter,  and 
which  may  desire  to  become  corporations  authorized  to  do  the 
business  of  insurance  in  this  state  of  such  kind  and  on  such  plan 
and  to  become  subject  to  the  provisions  of  this  article,  shall,  not 
later  than  December  thirty-first,  nineteen  hundred  and  eleven, 
file  with  the  superintendent  of  insurance,  on  blanks  to 
be  furnished  by  him  for  that  purpose,  (a)  an  application  for 
the  certificate  hereinafter  mentioned,  such  application  to  be  exe- 
cuted by  the  then  officers  and  directors  of  such  association,  and 
(b)  copies  of  the  original  articles  of  association  and  of  the  by-laws 
in  force  on  the  date  of  such  application,  duly  verified  by  its  presi- 
dent and  secretary  by  affidavits  to  the  effect  that  the  same  are  true 
copies;  and,  thereupon,  such  voluntary  association  shall  become 
a  corporation,  having  the  same  officers  and  directors,  and  subject 
to  such  articles  of  association  and  by-laws  so  far  as  the  same  are 
not  in  conflict  or  inconsistent  with  the  terms  of  this  article,  on  the 
superintendent  of  insurance,  if  in  his  judgment  it  will  safely  con- 


3'9i2  The  Insurance  Law.  §  262. 

duct  tbe  business  of  insurance  in  this  state,  issuing  a  certificate 
authorizing  it  to  continue  in  the  business  of  insurance  in  this  state 
of  the  kind  specified  in  such  by-laws  and  within  the  territory  in 
which  it  does  business  at  the  time  of  such  application,  provided 
that  such  business  and  territory  are  not  in  conflict  or  inconsistent 
with  the  terms  of  this  article,  to  the  same  effect  as  if  such  volun- 
tary association  had  been  formed  as  a  corporation  under  section 
two  hundred  and  sixty-three  of  this  chapter;  provided  that 
the  policies  of  any  such  association  issued  heretofore  or  at  any 
time  prior  to  the  issue  of  such  certificate  shall  be  as  valid  and  the 
rights  and  powers  of  the  officers  and  members  of  such  association 
shall  be  the  same  in  all  respects  as  if  it  had  been  originally  organ- 
ized as  a  corporation  under  this  article. 

Added  by  L.  1910,  chap.  328,  and  amended  by  L.  19ft,  obap.  323. 

§  262.  Co-operative  fire  insurance  corporations;  general 
provisions. 

1.  Classification  of  corporations.  All  corporations  to  whicu 
certificates  of  authority  shall  be  issued,  pursuant  to 
sections  two  hundred  and  sixty  and  two  hundred  and 
sixty-one  of  this  chapter,  or  which  shall  hereafter  be  s;iven 
certificates  on  their  due  incorporation,  pursuant  to  the  provisions 
of  this  article,  shall  be  known  as  co-operative  fire  insurance 
corporations.  Co-operative  fire  insurance  corporations  may  make 
insurances  (a)  on  property  against  loss  or  damaero  by  fire, 
lightning,  wind  storms,  tornadoes  or  earthquakes,  or  (b)  against 
loss  or  damage  by  larceny  or  loss  or  expense  in  recovering  the 
property  stolen  or  in  apprehending  the  thief.  Such  corpora- 
tions shall  do  business  on  an  advance  premium  plan  or  on  an 
assessment  plan,  but  no  such  corporation  shall  do  business  on  both 
such  plans.  Such  corporations  as  charge  or  collect  in  advance  the 
estimated  cost  of  insurance  for  the  full  term  of  the  policy  shall  be 
deemed  to  be  advance  premium  corporations.  All  other  co-opera- 
tive fire  insurance  corporations  shall  be  deemed  to  be  assessment 
corporations.  Advance  premium  corporations  shall  do  business  in 
not  more  than  five  adjoining  counties  until  the  amount  of  insur- 
ance in  force  exceeds  one  milh'on  dollars,  whereupon  any  such 
corporation   may  be   authorized    to   do  business  in    any   number 


§  'M2.       Co-oPEKATivE  Fire  Insurance  Corporations.      393 

of  adjoining  counties,  but  such  a  corporation  shall  not  be 
authorized  or  permitted  to  begin  or  to  do  business  until  or  unless 
it  shall  have  bona  fide  applications  for  insurance  or  insurance  in 
force  in  the  county  in  which  its  principal  office  is  located  amount- 
ing to  two  hundred  thousand  dollars.  Assessment  corporations 
shall  be  either  town  corporations,  which  shall  do  business  hi 
the  town  where  the  principal  office  is  situated  and,  after  the  amount 
of  insurance  in  force  exceeds  fifty  thousand  dollars,  may  be 
authorized  to  do  business  in  any  or  all  of  the  towns  of  a  single 
county;  or  county  corporations,  which  shall  do  business  in  the 
county  in  which  the  principal  office  is  situated  and,  after  the 
amount  of  insurance  in  force  exceeds  two  hundred  thousand  dol- 
lars, may  be  authorized  to  do  business  in  not  more  than  five 
adjoining  counties ;  except  that  such  corporations  as  had  legally 
extended  their  territories  to  more  than  five  counties  prior  to  the 
first  day  of  July,  nineteen  hundred  and  ten,  may  continue  to 
transact  business  in  all  of  such  counties;  but  an  assessment  cor- 
poration is  authorized  to  transact  business ;  (g)  the  names  of  the 
business  until  or  unless  it  shall  have  bona  fide  applications  for 
insurance  or  insurance  in  force  amounting,  if  a  town  corporation, 
to  fifty  thousand  dollars  in  the  town  in  w^hich  its  principal  office 
is  located,  or,  if  a  county  corporation,  to  two  hundred  thousand 
dollars  in  the  county  in  which  its  principal  office  is  located. 

2.  Extension  of  territorial  limits.  Any  co-operative  fire  insur- 
ance corporation  organized  under  the  laws  of  this  state  and  sub- 
ject to  the  provisions  of  this  article,  may  extend  its  territory 
within  the  limits  prescribed  in  this  section  by  filing  with  the 
superintendent  of  insurance  a  statement,  verified  by  the  oath  of  its 
president  and  secretary,  which  must  set  forth:  (a)  the  purpose 
for  which  such  statement  is  miade;  (b)  the  name  of  the  corpora- 
tion and  the  town  or  county  wherein  its  principal  office  for  the 
transaction  of  business  is  located;  (c)  a  copy  of  the  resolution  by 
the  board  of  directors  of  the  said  corporation  authorizing  the 
making  of  application  for  leave  to  extend  its  territory;  (d)  the 
amount  of  insurance  in  force  in  the  town  or  county  in  which  it<= 
principal  office  is  located;  (e)  the  total  amount  of  insurance  ir^ 
force;  (f)  the  names  of  the  towns  or  counties  in  which  the  cor- 
poration is  authorized  to  transact  business;  (g)  the  names  of  the 


394  The  Insurance  Law.  §  262. 

towns  or  counties  in  which  the  corporation  thereafter  proposed 
to  transact  business.  Upon  filing  such  statement,  so  verified, 
the  superintendent  of  insurance  shall,  if  compliance  with  the  re- 
quirements of  this  section  for  the  extension  of  territorial  limits 
has  been  shown  thereby,  issue  a  certificate  to  such  corporation 
authorizing  it  to  transact  the  business  of  insurance  in  the  terri- 
tory therein  stated  as  the  territory  in  which  it  proposes  thereafter 
to  transact  business. 

3.  Change  from  town  to  county  corporation.  Any  town  cor- 
poration which  may  have  extended  or  be  entitled  to  extend  its 
territory  to  all  of  the  towns  of  a  single  county,  as  provided  in 
this  section,  and  which  shall  prove  to  the  superintendent  of  insur- 
ance by  filing  the  statement  herein  provided  for  such  extension 
of  territory  that  it  has  insurance  in  force  amounting  to  at  least 
two  hundred  thousand  dollars,  shall  thereupon  receive  from  the 
superintendent  of  insurance  a  certificate  authorizing  it  to  transact 
business  in  the  county  wherein  its  principal  office  is  located  and 
in  not  more  than  five  -adjoining  counties,  and  shall  thereupon 
become  and  be  a  county  corporation  and  may  thereafter  exercise 
all  the  powers  granted  to  county  corporations  by  this  article. 

4.  Limitation  of  business. —  ISTo  corporation,  subject  to  the 
provisions  of  this  article,  shall  insure  any  buildings  or  property 
out  of  the  limits  of  the  territory  comprised  in  its  certificate  of 
incorporation  and  the  territory  to  which  it  may  heretofore  have 
been  legally  extended,  or  to  which  it  shall  hereafter  be  extended 
under  the  provisions  of  this  article,  except  that  when  a  member 
of  such  corporation  who  owns  or  occupies  premises  situate  in  part 
without  such  limits,  has  buildings  or  property,  or  pastures  live 
stock  on  that  part  thereof  lying  beyond  such  limits,  he  m.ay  insure 
such  property,  buildings  and  their  contents  and  such  live  stock 
with  such  property  or  buildings  as  lie  within  the  tentorial  limits 
of  the  corporation.  Co-operative  fire  insurance  cory)orations 
shall  not  be  formed  by  persons  residing  within  and  shall  not  do 
business  in    any  city   having  more   than    six  hundred   thousand 

inhabitants. 

Added  by  chapter  328  of  1910;  a8  amended  by  L.  1911,  chap.  323. 

A  co-operative  fire  insurance  company  may  not,  prior  to  the  issue  of  the  cer- 
tificate mentioned  in  §  260,  extend  its  business  immediately,  upon  filing  the 


§    2i63.  CO-OPEKATIVE    FlEE    INSURANCE    CORPORATIONS. 

Btatement  mentioned  in  §  262,  as  amended  by  L.  1910,  chap.  328.    Attorney- 
General  Rep.,  Nov.  15,  1910. 

§  263.    Incorporation  and  certificate  of  authority. 

Thirty  or  more  persons  residing  in  one  town  or  in  adjoining 
towns  in  any  county,  if  a  town  corporation,  or  in  one  county  or 
adjoining  counties  not  exceeding  five,  if  a  county  corporation  or  an 
advance  premium  corporation,  who  shall  each  own  in  good  faith 
real  estate  not  less  than  five  hundred  dollars  in  value,  and  collect- 
ively own  in  good  faith  insurable  real  estate  in  such  towns  or 
counties,  respectively,  to  the  value  of  fifty  thousand  dollars  or  over, 
may  become  a  corporation,  on  filing  with  the  superintendent  of  in- 
surance a  declaration,  executed  and  acknowledged  by  each  of  them, 
stating  their  intention  to  form  a  co-operative  fire  insurance  cor- 
poration for  the  purpose  of  engaging  in  the  business  of  insurance, 
pursuant  to  the  provisions  of  this  article,  which  declaration  shall 
state  (a)  whether  such  corporation  will  do  business  as  a  town, 
a  county  or  an  advance  premium  corporation,  (b)  the  town  or 
towns  or  county  or  counties  in  which  it  intends  to  do  business 
and  the  town  or  county  in  which  its  principal  office  is  to  be 
located,  (c)  its  corporate  name,  which  shall  include  the  word 
"  co-operative,"  (d)  a  copy  of  the  by-laws  adopted  by  such  persona 
for  the  regulation  of  the  business  of  such  corporation,  (e)  the 
names  and  post-office  addresses  of  the  officers  and  directors  of 
such  corporation  for  the  first  year,  and  (f )  such  other  informa- 
tion as  the  superintendent  of  insurance,  by  general  rules  or  on 
such  blanks  as  may  be  furnished  by  him,  shall  require;  which 
declaration  shall  show  that  such  persons  own  in  good  faith  real 
estate  in  the  amount  hereinbefore  specified.  At  the  time  of  such 
filing  or  at  any  time  within  one  year  thereafter,  such  persons, 
or  those  who  have  been  designated  as  the  president  and  the  secre- 
tary of  such  corporation,  may  file  with  the  superintendent  of 
insurance  a  statement,  verified  by  them,  to  the  effect  that  appli- 
cations for  insurance  in  the  amounts  respectively  indicated  in  the 
last  preceding  section  as  necessary  before  any  such  corporation  can 
be  authorized  to  begin  business  have  been  in  good  faith  made  to 
such  corporation,  such  statement  to  give  the  names  and  addresses  of 
such  applicants  and  the  amount  of  insurance  applied  for  by  each ; 
provided,  however,  that,  in  case  such  corporation  has  declared 


S96  The  Insurance  Law.  §  264. 

its  intention  to  do  business  on  the  advance  premium  plan,  such 
statement  shall  show  that  the  premium,  specifying  the  amount,  has 
been  paid  in  full  by  each  such  applicant.  If  all  the  requirements 
of  law  have  been  complied  with  and  the  superintendent  is  satis- 
fied, after  investigation,  that  such  statement  is  true,  he  shall  there- 
upon file  such  declaration  and  cause  it  to  be  recorded  in  his  ofiioe, 
with  the  certificate  of  the  attorney-general,  in  a  book  to  be  kept 
for  that  purpose,  and  isaue  to  such  corporation  a  certified  copy  of 
the  papers  so  recorded,  together  witb  a  certificate  authorizing  such 
corporation  to  carry  on  the  business  of  insurance  as  indicated  in 
such  declaration. 
Added  by  chapter  328  of  1910. 

§  264.    By-laws- 

The  by-laws  of  all  corporations  to  which  a  certificate  of  authority 
shall  be  issued,  pursuant  to  the  provisions  of  this  article,  shall 
include  or  shall  be  amended  so  as  to  include,  substantially,  the 
following  provisions : 

1.  Directors  and  annual  meeting.  That  the  corporate  powers 
of  such  corporation  shall  be  exercised  by  a  board  of  directors, 
who,  if  of  a  town  corporation,  shall  not  be  less  than  five,  and  if  a 
county  or  advance  premium  corporation,  shall  not  be  less  than 
eleven;  that  such  directors  shall  be  divided  into  classes  and  a 
portion  only  elected  each  year ;  that  they  shall  be  elected  for  a  term 
of  not  more  than  four  years ;  that  they  shall  choose  from  their  num- 
ber a  president,  secretary  and  such  other  officers  as  may  be  deemed 
necessary ;  and  that,  after  the  first  year,  the  directors  shall  be 
chosen  at  an  annual  meeting,  to  be  held  on  the  second  Tuesday  in 
January  in  each  year,  unless  some  other  day  is  designated  in  such 
by-laws,  at  which  meeting  each  person  insured  shall  have  one  vote 
and  shall  be  entitled  to  vote  by  proxy  under  such  rules  and  ropi- 
lations  as  may  be  prescribed  by  the  by-laws  unless  prohibited  by 
such  by-laws. 

2.  Kecords.  That  each  euch  corporation  shall  keep  proper 
books  (including  a  policy  register)  in  which  the  secretary  shall 
enter  a  complete  record  of  all  of  the  transactions  of  such  corpora- 
tion and  of  its  board  of  directors  and  executive  committee,  which 
books  shall  at  all  times  show  fully  and  truly  the  condition,  affairs 


► 


§  264.       Co-operative  Fire  Insurance  Corporations.       397 

and  business  of  such  corporation,  and  shall  be  open  for  inspection 
by  every  person  insured  each  day  from  nine  o'clock  in  the  fore- 
noon to  four  o'clock  in  the  afternoon,  Sundays  and  legal  holidays 
excepted. 

3.  Assessments.  That  such  corporation  shall  have  the  power  to 
assess  for  the  purposes  specified  in  sections  two  hundred  and  sixtv- 
six  and  two  hundred  and  sixty-seven  of  this  chapter.  That,  in  case 
an  assessment  is  made,  the  secretary  shall,  within  forty-five  days 
thereafter,  notify,  by  written  or  printed  notice,  every  person  insured 
that  such  assessment  has  been  made,  specifying  the  amount  due 
from  such  person  and  the  time  when  and  to  whom  such  amount 
must  be  paid ;  provided  that  such  time  shall  not  be  less  than  thirty 
nor  more  than  sixty  days  from  the  service  of  such  notice,  which 
may  be  either  personal  or  by  mail,  and,  if  by  mail,  shall  be  deemed 
complete  if  such  notice  is  deposited,  postage  prepaid,  in  the 
post-office  at  the  place  where  the  principal  office  of  the 
corporation  is  located,  directed  to  the  person  insured  at 
his  last  known  place  of  residence  or  business.  That  any 
person  insured  who  neglects  or  refuses  to  pay  his  assess- 
ment may,  for  such  reason  or  for  any  other  reason  satisfac- 
tory to  the  board  of  directors  or  its  executive  committee,  be  ex- 
cluded from  such  corporation  and,  when  thus  excluded,  the  secre- 
tary shall  cancel  or  withdraw  his  policy  or  policies,  provided  that 
such  person  shall  remain  liable  for  the  payment  of  his  pro-rata 
share  of  losses  and  expenses  incurred  on  or  before  the  date  of  his 
exclusion  and  for  the  penalty  herein  provided,  in  case  an  action 
shall  be  brought  against  him.  If  any  member  of  such  corporation 
shall  be  excluded  and  the  policy  issued  to  him  cancelled,  the  secre- 
tary shall  forthwith  enter  such  cancellation  and  the  date  thereof 
on  the  records  kept  in  the  office  of  the  corporation,  and  serve 
notice  of  such  cancellation  on  the  person  so  excluded,  as 
provided  herein  for  the  service  of  notice  of  assessments,  pro- 
vided that,  in  that  event,  the  person  who  is  thus  excluded 
or  whose  policy  is  thus  cancelled  shall  be  entitled  to  the 
repayment  of  an  equitable  portion  of  the  unearned  paid  premium 
on  such  policy.  That  the  officers  of  such  a  corporation  shall  pro- 
ceed to  collect  all  assessments  within  thirty  days  after  the  ex- 
piration of  the  notice  to  pay  the  same,  and  that  neglect  or  refusal 


398  The  Insurance  Law.  §  265. 

on  their  part  so  to  proceed  or  to  perform  any  of  the  duties  im- 
posed on  them  by  this  article  shall  render  them  liable,  individually, 
for  the  amount  lost  to  any  person  due  to  such  neglect  or  refusal, 
and,  to  that  end,  an  action  may  be  maintained  by  such  person 
against  such  officers  to  collect  such  amount.  That  an  action  may 
be  brr^niQjht  by  the  corporation  against  any  person  insured  therein 
to  recover  all  assessments  which  he  may  neglect  or  refuse  to  pay, 
and,  if  such  action  is  brought,  there  may  be  recovered  from  him 
both  the  amount  so  assessed,  with  lawful  interest  thereon,  and,  as 
a  penalty  for  such  neglect  or  refusal,  fifty  per  centum  of  such  as- 
sessment in  addition  thereto. 

4.  Withdrawal  of  members;  new  members.  That  any  person 
insured  by  such  corporation  may  withdraw  therefrom  at  any  time 
by  giving  ten  days'  notice  in  writing  to  the  secretary  and  paying 
his  share  of  all  claims  existing  against  such  corporation  and  upon 
Buch  withdrawing  member  surrendering  his  policy  or  policies. 

5.  That  persons  may  be  insured  who  reside  or  own  property 
within  the  territory  in  which  the  corporation  is  authorized  to  do 
business,  upoi^  the  same  terms  and  conditions  as  original  mem- 
bers and  such  other  terms  as  may  be  prescribed  in  the  by-laws  of 
the  corporation, 

6.  That  nonresidents,  who  own  property  within  the  territory 
in  which  such  corporation  may  do  business,  may  be  insured  therein 
and  shall  have  all  the  rights  and  privileges  of  the  corporation  and 
be  accountable  as  are  other  persons  insured  therein,  but  shall  not 
be  eligible  to  hold  office  in  the  corporation.  The  by-laws  of  any 
such  corporation  may  be  amended  at  any  time,  subject  to  the  writ- 
ten approval  of  the  superintendent  of  insurance. 

Added  by  chapter  328  of  1910;  as  amended  by  L.  1911,  chap.  323. 

§  265.    Policies. 

The  policies  of  insurance  issued  by  any  such  corporation  shall, 
if  against  loss  or  damage  by  fire  or  lightning,  conform  to  the 
standard  fire  policy  prescribed  in  section  one  hundred  and 
twenty-one  of  this  chapter,  with  such  modifications  therein  as 
shall  be  approved  in  writing  by  the  superintendent  of  insur- 
ance. Every  policy  issued  by  such  a  corporation  shall  indicate 
clearly,  in  words  prominently  displayed  at  the  top  of  the  first  page 


§  2G6.       Co-operative  Fire  Insurance  Corporations.      399 

or  across  the  face  thereof,  that  suoh  policy  is  issued  on  the  co- 
operative plan,  and  shall  include  a  provision  in  the  body  of  the 
policy  to  the  effect  that  the  acceptance  of  it  by  the  person  insured 
shall  bind  such  person  to  pay  all  assessments  which  may  be  levied 
thereon.  Each  such  policy  shall  have  printed  on  the  back  thereof  a 
copy  of  the  by-laws  of  such  corporation  in  force  at  the  time  such 
policy  is   issued. 

Added  by  chapter  328  of  1910. 

Where  a  receiver  is  appointed  of  an  insolvent  mutual  fire  insurance  com- 
pany, the  outstanding  policies  of  said  company  are  thereupon  cancelled  by 
operation  of  law  and  S'ubsequent  losses  under  such  policies  are  not  liabilities 
which  may  be  enforced  against  the  receiver.  Attorney -General  Rep.,  July  23, 
1901). 

§  266.  General  provisions  affecting  assessment  corpora- 
tions only. 

The  following  provisions  shall  affect  corporations  doing  busi- 
ness on  the  assessment  plan,  pursuant  to  the  provisions  of  this 
article : 

1.  Such  corporations  may  issue  policies  of  insurance  on 
detached  dwelling  houses,  barns,  hop  houses,  cheese  factories, 
creameries,  school  buildings  and  other  buildings,  and  the  con- 
tents of  such  buildings,  on  farm  produce  and  other  property  not 
more  hazardous  and  on  live  stock  provided  that  no  such  policy 
shall  be  issued  for  more  than  seven  thousand  dollars  on  any  one 
risk,  or,  if  such  policy  is  against  loss  or  damage  by  reason  of 
larceny,  to  the  extent  of  not  more  than  five  hundred  dollars  on 
any  one  risk. 

2.  Every  such  corporation  may  classify  the  buildings  or  prop- 
erty insured  therein  at  the  time  of  the  insurance  and  issue  policies 
under  different  rates.  Every  such  corporation  may  collect  at  the 
time  of  the  issue  of  a  policy  such  survey,  policy  and  membership 
fees,  or  any  of  them,  not  to  exceed  the  sum  of  two  dollars  for 
all  of  such  fees,  and  such  percentage  of  the  amount  insured,  not 
to  exceed  one-tenth  of  one  per  centum  of  the  amount  insured  for 
each  year  of  the  term  of  insurance,  as  the  by-laws  may  provide. 

3.  Every  such  corporation  may  borrow,  on  the  credit  of  the 
corporation,  sufficient  to  pay  any  loss,  or  make  an  assessment 
upon  all  the  property  insured,  pro  rata,  according  to  the  classifica- 


400  The  Ixsim-ance  Law.  §  267. 

tion  or  according  to  the  amount  insured,  as  may  be  provided  in  the 
by-laws,  sufficient  to  pay  such  loss.  If  it  is  deemed  to  be  for  the 
best  interest  of  the  corporation,  such  corporation  may  estimate  tlie 
amount  necessary  to  pay  all  losses  and  expenses  for  the  current 
year  and  to  supply  any  deficiency  in  the  preceding  year,  and  assess 
and  collect  the  same  from  the  members  of  the  corporation.  Each 
assessment  shall  be  made  pro  rata  upon  all  the  property  at  the 
time  insured,  according  to  its  classification  or  according  to  the 
amount  insured.  The  expense  and  cost  of  collection  of  assess- 
ments may  be  regulated  by  the  by-laws. 
Added  by  chapter  328  of  1910;  as  amended  by  L.  1911,  chap.  303. 

§  267.  General  provisions  affecting  advance  premium  cor- 
porations only. 

The  following  provisions  shall  affect  corporations  doing  busi- 
ness on  the  advance  premium  plan,  pursuant  to  the  provisions  of 
this  article. 

1.  Such  a  corporation  may  issue  policies  of  insurance  on  dwell- 
ing houses,  stores,  school  buildings,  churches,  municipal  buildings 
and  all  other  kinds  of  buildings  and  on  household  furniture  and 
the  other  contents  of  such  buildings,  on  farm  produce  and  other 
property,  and  on  live  stock,  provided  that  no  such  policy  shall 
be  issued  for  more  than  ^Ye  thousand  dollars  on  any  one  risk, 
or  in  excess  of  fifteen  thousand  dollars  in  any  one  block  or  square 
in  the  business  portion  of  any  city  or  village;  and  provided  that 
such  a  corporation  shall  not  issue  a  policy  for  more  than  two 
thousand  dollars  on  any  one  risk  nor  aggregating  more  than  seven 
thousand  dollars  in  any  one  block  or  square  in  the  business  por- 
tion of  any  city  or  village  without  water  protection ;  and  provided, 
further,  that  the  total  amount  of  insurance  written  by  any  such 
corporation  in  the  business  section  of  any  city  or  village  shall 
not  exceed  one  per  centum  of  the  total  amount  of  insurance  in 
force  in  such  corporation. 

2.  The  expense  of  management  of  any  such  corporation  shall 
not  exceed  in  any  one  calendar  year  thirty-five  per  centum  of  its 
premium  income  in  such  year;  provided  that  any  such  corpora- 
tion may  expend  in  such  year  an  additional  ^ye  per  centum  ol 
such  income  for  expenses  incurred  in  the  inspection  of  risks  and 


§  ,2 67.        Co-OPEKATIVE  Fire  Insitrance  Corporations.         401 

the  ^adjustment  of  losses  and  legal  expenses  connected  therewith: 
and  provided  further  that  any  expenses  incurred  in  connectioE 
with  the  investment  of  funds,  not  to  exceed  ^Ye  per  centum  ol 
the  income  therefrom,  may  be  defraved  from  such  income. 

3.  Every  such  corporation  shall  at  all  times  maintain  a  re 
serve  equal  to  eighty  per  centum  of  the  unearned  portion  of  the 
premiums  charged  to  its  policy  holders  for  all  policies  in  force 
from  their  dates  of  issue;  provided,  however,  that  any  such  cor- 
poration, which  shall  or  may  at  any  time  appear,  by  any  examin- 
ation made,  or  by  any  annual  statement  filed,  subsequent  to  the 
first  day  of  January,  nineteen  hundred  and  thirteen,  not  to  possess 
or  hold  and  maintain  such  reserve,  shall  reduce  any  deficiency  in 
such  reserve  by  not  less  than  fifteen  per  centum  of  the  deficiency 
on  or  before  the  filing  of  the  annual  statement  required  by  law 
to  be  made  as  of  the  thirty-first  day  of  December  next  following 
and  by  further  amounts  of  not  less  than  fifteen  per  centum 
of  such  deficiency  on  or  before  the  filing  of  the  annual  states 
ments  required  by  law  to  be  made  as  of  the  thirty-first  day  of 
December  in  each  and  every  ensuing  year,  until  the  required  re- 
serve has  been  accumulated.  If  by  any  examination  thereafter 
made,  or  by  any  annual  statement  thereafter  filed,  any  such  cor- 
poration shall  appear  not  to  have  made  the  percentage  of  improve- 
ment herein  required,  the  superintendent  of  insurance  may,  in  the 
absence  of  good  cause  shown  why  an  assessment  should  not  be 
made,  direct  such  corporation  to  make  good  the  entire  amount  of 
deficiency  in  reserve  by  assessment  or  otherwise  within  sixty  days. 

4.  Such  corporation  shall  not  make  any  additions  to  its  sur- 
plus after  the  same  equals  one  per  centum  of  the  amount  of  insur- 
ance in  force,  provided  that  any  such  corporation  having  less 
than  one  million  dollars  of  insurance  in  force  may  maintain  a 
surplus  not  exceeding  ten  thousand  dollars.  Any  surplus  may 
be  distributed  among  the  members  whose  policies  shall  expire 
during  the  ensuing  year,  proportioned  according  to  the  classifica- 
tion of  the  risks  and  the  premiums  paid  thereon,  such  surplus 
being  paid  in  cash  or  applied  as  a  rebate  on  the  premium  re- 
quired to  renew  the  insurance  on  the  same  risk;  provided  that 
no  such  distribution  shall  be  made  until  all  sums  of  money  which 


402  The  Insurance  Law.  §  267. 

may  kave  been  adtvanced  to  tlie  corporation  pursuant  to  tbe  pro- 
visions of  subdivision  seven  of  tbis  article  sball  bave  been  repaid. 

5.  In  case  any  deficiency  is  found  to  exist  in  any  sucb  corpo- 
ration, by  reason  of  fire  or  other  losses  and  expenses  due  and 
unpaid,  tbe  same  sball  be  made  good  witbin  sixty  days  tbereaf  ter, 
in  case  tbe  superintendent  of  insurance  so  directs,  and,  in  case  sucb 
deficiency  is  not  so  made  good,  tbe  directors  sball  proceed  to  assess 
tbe  members  of  tbe  corporation  a  sufficient  sum  to  make  good  sucb 
deficiency.  All  assessments  sball  be  made  pro  rata  upon  all  of  the 
property  insured  by  the  corporation  at  the  time  sucb  assessment 
is  made,  according  to  its  classification  or  according  to  tbe  amount 
insured;  tbe  method  of  computing  tbe  same  to  be  first  approved 
by  tbe  superintendent  of  insurance. 

6.»  No  sucb  corporation  shall  reinsure  or  assume  tbe  risks  of 
any  other  corporation,  except  that  any  sucb  corporation  may,  with 
tbe  approval  of  the  superintendent  of  insurance,  reinsure  all  or 
any  part  of  tbe  outstanding  risks  of  any  other  advance  premium 
corporation  in  process  of  or  contemplating  liquidation,  and,  with 
tbe  consent  of  tbe  respective  policyholders,  may  assume  all  or  any 
part  of  tbe  outstanding  policies  of  any  such  liquidating  corpora- 
tion. All  of  the  provisions  of  subdivision  three  of  tbis  section  with 
regard  to  tbe  liability  of  an  advance  premium  co-operative  fire 
insurance  corporation  for  unearned  premiums  shall  apply  to  any 
advance  premium  co-operative  fire  insurance  corporation  which 
shall  or  may  reinsure  or  assume  tbe  policy  obligations  of  any 
liquidating  corporation,  and  the  basis  upon  which  sucb  unearned 
premiums  sball  be  calculated  shall  be  the  original  premiums  paid 
by  tbe  respective  policyholders  for  the  insurance  of  their  property 
by  sucb  liquidating  corporation.  !N^o  such  corporation  sball  collect 
any  policy  or  survey  fee,  nor  pay  any  commission  to  an  officer  or 
other  person  whose  duty  it  is  to  determine  tbe  character  of  tbe 
risk. 

7,  Any  director,  officer  or  member  or  members  of  any  sucb 
corporation,  or  any  other  person  may  advance  to  sucb  corporation, 
any  sum  or  sums  of  money  deemed  necessary  for  the  purposes  of 
its  business  or  to  enable  it  to  comply  with  any  requirement  of  the 
law,  which  said  moneys  and  sucb  interest  thereon  as  may  have 


i 


§§  268,  269.    Co-oPEEATivE  Fire  Insurance  Corporations.    403 

been  agreed  upon,  not  to  exceed  six  per  centum  per  annum,  shall 
be  repaid  only  out  of  the  surplus  earnings  or  profits  of  such  cor- 
poration, and  shall  not  form  a  part  of  the  legal  liabilities  of  the 
corporation  or  of  its'  members  and  shall  not  be  subject  to  repay- 
ment except  as  hereinabove  provided. 

Added  by  chapter  328  of  19ilO;  as  amended  by  L.  1911,  cbap.  323,  aoid  L. 
1912,  chap.  90. 

§  268.    Application  of  other  sections  of  this  chapter. 

Sections  six,  seven,  nine,  ten,  eleven,  sixteen,  twenty,  thirty-six, 
thirty-nine,  forty,  fo  ay-four,  forty-five,  forty-six,  forty-seven, 
forty-eight,  forty-nine,  fifty-two,  fifty-three,  and  sixty-three  of  this 
chapter  are  hereby,  to  the  extent  that  they  are  now  or  hereafter  may 
be  applicable  to  corporations  authorized  to  engage  in  the  business 
of  insurance  in  this  state,  specified  in  section  one  hundred  and  ten 
of  this  chapter,  made  specifically  applicable  to  any  corporation 
to  which  a  certificate  of  authority  shall  be  issued,  pursuant  to  the 
terms  of  this  article. 

Added  by  L.  1910,  chap.  328. 

§  269.    Extension  of  corporate  existence. 

Unless  otherwise  provided  in  its  certificate  of  incorporation  or 
articles  of  association,  the  corporate  existence  of  every  corporation 
to  which  a  certificate  of  authority  shall  be  issued,  pursuajit  to  the 
terms  of  sections  two  hundred  and  sixty  and  two  hundred  and  sixty- 
one  of  this  chapter,  is  hereby  extended  to  the  end  of  the  twenty- 
fifth  year  from  and  including  the  year  beginning  the  first  day  of 
January,  nineteen  hundred  and  eleven. 

Added  by  chapter  328  of  1910. 


404  The  Insurance  Law.  §  300. 

AETICLE  X. 

Lloyds  and  Inteb-insurers. 

Section  300.  Application  of  article. 

301.  Application,  examination  and  certificate  of  authofity. 

302.  General    provisions  affecting  Lloyds  and  inter- insurers  licensed 

under  the  preceding  section. 

303.  Application  of  other  sections  of  this  chapter. 

304.  General  provisions  affecting  Lloyds  and  inter-insurance  associa- 

tions organized  after  July  first,  nineteen  hundred  and  eleven. 

305.  Provision  for  the  admission  of  Lloyds  and  inter-insurance  asso- 

ciations domiciled  in  other  states. 

§  SCO.    Application  of  article. 

Notwithstanding  the  provisions  of  section  fifty-four  of  this  chap- 
ter, persons,  partnerships  or  associations  which,  on  October  first, 
eighteen  hundred  and  ninety-two,  were  lawfully  and  actually  en- 
gaged in  the  business  of  insurance  as  Lloyds  or  inter-insurers  or 
individual  underwriters,  may,  after  January  first,  nineteen  hun- 
dred and  eleven,  continue  to  do  the  business  of  insurance  in  this 
state,  provided  that  such  persons,  partnerships  or  associatioTiii 
shall  comply  with  the  provisions  of  this  article,  but  not  otherwise; 
and  9udh  persons,  partnerships  and  associations  as  may  comply 
with  and  be  licensed  according  to  sections  three  hundred  and  four 
and  three  hundred  and  ^ve  of  this  article  may  do  such  insurance 
business  as  is  therein  permitted.  Any  persons,  partnerships  or 
associations  which,  after  January  first,  nineteen  hundred  and 
eleven,  shall  in  this  state  engage  in  the  business  of  inpurance  as 
Lloyds  or  inter-insurers,  or  represent  or  advertise  that  they  arr 
so  engaged,  without  having  been  authorized  so  to  do  in  accordance 
with  the  provisions  of  this  article,  and  any  agent,  subagent,  o.r 
representative  of  any  such  persons,  partnerships,  or  assorintion* 
not  so  authorized  to  d^  such  business  in  this  state,  who  shall  after 
January  first,  nineteen  hundred  and  eleven,  in  any  way  represent 
any  such  unauthorized  persons,  partnerships  or  association?, 
directly  or  indirectly,  in  engaging  or  attempting  to  engage  in  tho 


§  301.  Lloyds  and  Intek-insukeks.  405 

business  of  in'surance  in  this  state,  shall  be  guilty  of  a 
misdemeanor. 

Added  by  L.  1910,  cliap.  038,  and  amended  by  L.  1911,  chap.  502. 

Residents  of  New  York,  who  have  received  certificates  under  §  137  authoriz- 
ing them  to  write  surplus  lines,  may  place  such  insurance  in  foreign  or  unau- 
thorizing  Lloyds  without  becoming  liable  under  §  300.  Attorney-General  Rep., 
August  26,  1910. 

§  301.    Application,  examination  and  certificate  of  authority. 

Not  later  than  August  first,  nineteen  hundred  and  ten,  any  per- 
sons, partnerships  or  associations  claiming  that  they  were  law- 
fully and  actually  doing  the  business  of  insurance  in  this  state 
as  Lloyds  or  inter-insurers  on  October  first,  eighteen  hundred 
and  ninety-two,  shall  file  with  the  superintendent  of  insurance, 
on  blanks  furnished  by  him  for  that  purpose,  (a)  an  application 
for  a  certificate  authorizing  the  continuance  of  such  business 
after  January  first,  nineteen  hundred  and  eleven,  which  applica- 
tion shall  specify  the  kinds  of  insurance  intended  to  be  written 
after  the  last  mentioned  day;  (b)  a  verified  statement  of  the 
condition  of  such  Lloyds  or  inter-insurers  as  of  the  first  day  of 
July,  nineteen  hundred  and  ten;  (c)  an  agreement,  executed 
and  duly  acknowledged  by  each  and  every  individual  under- 
writer or  inter-insurer  or  his  attorney-in-fact  duly  authorized 
thereto,  providing  in  substance  that  personal  service  of  a  sum- 
mons or  other  legal  process  in  an  action  against  any  such  Lloyds 
or  inter-insurers,  if  made  upon  a  person  specified  in  such  agree- 
ment and  resident  in  the  state  of  !N"ew  York,  shall  be  equivalent 
to  the  personal  service  within  this  state  of  such  summons  or  other 
process  on  each  and  every  of  such  individual  underwriters  or 
inter-insurers;  and  (d)  such  other  matters  as  the  superintendent 
of  insurance  may  prescribe.  Thereafter,  and  not  later  than  Decem- 
ber first,  nineteen  hundred  and  ten,  the  financial  condition  of 
and  the  methods  of  doing  business  by  the  persons,  partnerships 
and  associations  so  applying,  shall  be  examined  as  provided  in 
section  thirty-nine  of  this  chapter.  Thereafter,  the  superintend- 
ent of  insurance  shall  grant  to  such  persons,  partnerships  and  asso- 
ciations as  shall  have  complied  with  the  provisions  of  this  article 
a  certificate  of  authority  to  conduct  the  business  of  insurance  in 


406"  The  Insurance  Law.  §  30i2. 

this  state  on  and  after  January  first,  nineteen  hundred  and 
eleven,  which  certificate  shall  be  revocable  or  subject  to  suspen- 
sion, if  any  of  such  persons,  partnerships  or  associations  fail  to 
comply  with  any  or  all  of  the  requirements  of  this  chapter  appli- 
cable thereto,  or  upon  the  happening  of  any  event  which  on  Jan- 
uary first,  nineteen  hundred  and  eleven,  would  prohibit  such  per- 
sons, partnerships  or  associations  from  transacting  business  in 
this  state  as  set  forth  in  section  three  hundred  and  two.  Such 
certificate  shall  indicate  the  kinds  of  insurance  which  may  be  writ- 
ten by  such  persons,  partnerships  or  associations,  provided  that 
the  same  are  not  other  than  those  now  or  which  may  hereafter  be 
specified  in  sections  one  hundred  and  ten  and  one  hundred  and 
fifty  of  this  chapter. 
Added  by  L.  1910,  chap.  638. 

§  302.  General  provisions  affecting  Lloyds  and  inter- 
insurers  licensed  under  the  preceding  section. 

No  such  persons,  partnerships  or  associations  who  claim 
that  they  were  lawfully  and  actually  doing  the  business  of 
insurance  in  this  state  as  Lloyds  or  inter-insurers  on  October 
first,  eighteen  hundred  and  ninety-two,  shall,  after  January 
first,  nineteen  hundred  and  eleven,  engage  in  the  business  of 
insurance  in  this  state  as  Lloyds  or  inter-insurers,  (a)  unless  there 
shall  be  on  file  in  the  office  of  the  superintendent  of  insurance  a 
copy  of  the  original  articles  of  association,  copartnership  agreement 
or  inter-insurance  contract,  together  with  all  amendments  thereto, 
accompanied  by  an  affidavit,  verified  by  an  attorney-in-fact,  to  the 
effect  that  it  is  a  true  copy,  and  stating  where  the  principal  office 
of  such  persons,  partnerships  or  associations  so  doing  such  business 
is  located,  the  kinds  of  insurance  in  which  it  is  engaged,  or  in 
which  it  lawfully  claims  the  right  to  engage,  the  name  under 
which  business  is  done  and  the  names  and  post-office  addresses  of 
all  the  underwriters,  inter-insurers  and  attorneys-in-fact  so  doing 
business  as  Lloyds  or  inter-insurers,  which  affidavit  shall  be  so 
verified  Dot  earlier  than  December  fifteenth,  nineteen  hundred  and 
ten;  or  (b)  which  shall  change  the  name  under  which  business 
is  done,   without   first  obtainingi  the  written   approval   of  the 


§  302.  Lloyds  and  Inter-insukers.  407 

superintendent  of  insurance ;  or  (c)  whicli  shall  establish  branches 
under  other  or  different  names  or  titles;  or  (d)  which  shall  have 
a  name  so  similar  to  that  of  any  other  Lloyds  or  insurance  corpo- 
ration as  in  the  opinion  of  the  superintendent  of  insurance  is 
calculated  to  deceive,  and  any  existing  Lloyds  having  such  a  name 
may  be  required  to  change  same  by  the  superintendent  of  insur- 
ance; or  (e)  which  does  not  maintain  at  all  times,  in  addition 
to  all  outstanding  claims  and  other  liabilities,  a  sum  equal  to  the 
total  unearned  premiums  on  the  policies  in  force,  calculated  on  the 
gross  sum  without  any  deduction  on  any  account,  charged  to  the 
policyholder  on  each  respective  risk  from  the  date  of  the  policy; 
or  (f )  which  shall  not  have  its  assets  invested  as  prescribed  by  sec- 
tion sixteen  of  this  chapter ;  or  (g)  unless  each  of  the  underwriters 
shall  be  worth  in  his  own  right  not  less  than  twenty  thousand  dol- 
lars above  all  liabilities,  such  fact  to  be  determined  by  the  superin- 
tendent of  insurance,  and  in  determining  same  he  may  take  the 
signed  reports  of  commercial  agencies  having  upwards  of  one 
hundred  thousand  subscribers.  'No  such  persons,  partnerships  or 
associations  shall  change  the  location  of  their  principal  office  for 
the  transaction  of  business  without  first  filing  with  the  superin- 
tendent of  insurance  the  affidavit  of  an  attorney-in-fact  stating 
where  such  office  is  to  be  located,  and  in  no  event  shall  such  office 
be  located  outside  the  state  of  E'ew  York.  Every  change  in  the 
underwriters,  inter-insurers  or  attorneys-in-fact,  made  after  the 
filing  of  the  affidavit  previously  mentioned  in  this  article,  shall  be 
reported  to  the  superintendent  of  insurance  by  a  written  verified 
statement  of  an  attorney-in-fact  within  twenty  days  after  the  same 
has  been  made,  which  affidavit  shall  be  accompanied  by  an  agree- 
ment, executed  and  duly  acknowledged,  and  binding  the  new 
underwriter  or  underwriters,  inter-insurer  or  inter-insurers  to  the 
original  agreement  between  all  the  underwriters  or  inter-insurers 
required  to  be  filed  by  section  three  hundred  and  one  of  this 
chapter,  with  regard  to  the  service  of  process.  The  underwriters^ 
liability  shall  not  be  included  in  the  statements  or  reports  of  such 
persons,  partnerships  or  associations  either  as  an  asset  or  a  liability 
and  any  deposit  made  by  an  underwriter  with  any  such  persons,, 
partnerships  or  associations,  if  treated  as  an  asset  in  any  statement 
or  report,  shall  also  be  charged  as  a  liability. 

Added  by  L.  1910,  chap.  638,  and  amended  by  L.  1911,  chap.  502. 


408  TiiE  Insurance  Law.  §§  30'3,  304. 

§  303.    Application  of  other  sections  to  this  chapter. 

After  January  first,  nineteen  hundred  and  eleven,  sections  six, 
seven,  nine,  sixteen,  twenty,  twenty-one,  twenty-two,  thirty-six, 
thirty-nine,  forty,  forty-four,  forty-five,  forty-six,  forty-seven, 
forty-eight,  forty-nine,  fifty-three,  sixty-three,  one  hundred  and 
eighteen  of  this  chapter  are  herehy,  to  the  extent  that  they  are 
now  or  hereafter  may  become  applicable  to  corporations  authorized 
to  engage  in  the  business  of  insurance  in  this  state  and  specified 
in  sections  one  hundred  and  ten  and  one  hundred  and  fifty  of  this 
chapter,  made  specifically  applicable  to  any  persons,  partnerships 
or  associations  to  which  this  article  is  applicable,  provided  that, 
where  any  of  such  sections  imposes  a  duty  on  or  prohibits  an  act 
by  or  in  any  way  refers  to  the  officers  or  directors  of  any  such 
corporation,  such  sections,  when  read  in  connection  with  this 
article,  shall  be  deemed  to  mean  respectively  the  duly  authorized 
attorney-in-fact  or  attorneys-in-fact  or  the  executive,  underwriting 
or  managing  committee  of  such  persons,  partnerships  or  associa- 
tions, and  provided,  further,  that  where  any  of  such  sections  refers 
to  a  corporation,  the  same,  when  read  in  connection  with  this 
article,  shall  be  deemed  to  mean  the  persons,  partnerships  or  asso- 
ciations to  which  this  article  is  applicable. 

Added  by  L.  1910,  chap.  638. 

§  304.  General  provisions  affecting  Lloyds  and  inter- 
insurance  associations  organized  after  July  first,  nineteen 
hundred  and  eleven. 

On  and  after  July  first,  nineteen  hundred  and  eleven,  twenty- 
five  or  more  persons,  partnerships  or  corporations  which  have 
the  requisite  authority  by  their  charters  may  engage  in  the 
business  of  such  insurance  as  is  specified  in  sections  one  hnndr/^d 
and  ten  and  one  hundred  and  fifty  of  this  chapter  as  Lloyds  or 
inter-insurers  upon  receiving  a  certificate  of  authority  from  the 
superintendent  of  insurance  so  to  do.  The  application  for  such 
certificate  of  authority  shall  be  signed  by  the  attorney  or  attor- 
neys-in-fact of  those  persons  desiring  such  certificate  and  must  be 
accompanied  by  a  declaration  which  must  set  forth,  (a)  the  name 
under  which  the  business  is  to  be  conducted,  which  name  shall  not 


§  304.  Lloyds  and  Intek-insureks.  409 

be  so  similar  to  any  existing  Lloyds,  inter-insurance  association  or 
corporation  as,  in  the  opinion  of  the  superintendent  of  insurance, 
is  calculated  to  deceive;  (b)  the  exact  location  of  the  principal 
office  at  which  the  business  is  to  be  conducted,  which  office  must  be 
in  the  state  of  New  York;  (c)  the  kinds  of  insurance  intended  to  be 
written,  which  must  be  only  of  those  permitted  by  this  section; 
(d)  an  exact  copy  of  the  articles  of  association,  copartnership 
agreement  or  inter-insurance  contract  made  between  such  under- 
writers or  inter-insurers;  (e)  the  names  and  addresses  of  all  of  the 
underwriters  or  inter-insurers  so  proposing  to  engage  in  such  busi- 
ness; (f)  the  designation  and  appointment  of  one  or  more  attor- 
neys-in-fact who  shall  be  residents  of  this  state,  with  full  names 
and  addresses,  upon  whom  a  simimons  or  other  legal  process  can 
be  served;  (g)  that  a  fund  of  at  least  two  hundred  thousand  dol- 
lars has  been  contributed  by  the  subscribers  as  a  guaranty  fund  for 
policy  holders  and  is  in  the  possession  of  the  attorney  or  attorneys- 
in-fact  for  such  subscribers  and  is  either  in  cash  or  invested  in 
such  securities  as  are  specified  in  section  sixteen  of  this  chapter. 
Such  declaration  must  be  signed  and  sworn  to  by  all  of  the  per- 
sons, and  the  proper  officers  of  the  corporations  so  proposing  to 
engage  in  the  business  of  insurance  pursuant  to  this  section. 
After  such  documents  specified  shall  be  filed,  the  superintendent 
of  insurance  shall  cause  an  examination  of  such  Lloyds  or  inter- 
insurance  association  to  be  made,  and,  if  he  is  satisfied  that  all  of 
the  facts  alleged  in  the  declaration  are  true  and  that  the  articles 
of  association,  copartnership  agreement  or  inter-insurance  con- 
tract is  of  such  a  character  that  the  rights  of  the  policyholders 
will  be  protected  thereunder,  he  shall  issue  a  certificate  of  author- 
ity for  such  Lloyds  or  inter-insurance  association  to  do  such  busi- 
ness of  insurance  in  this  state  as  is  specified  in  the  declaration, 
which  certificate  shall  be  issued  to  such  Lloyds  or  inter-insurance 
association,  under  the  name  chosen  and  approved,  authorizing  the 
underwriters  or  inter-insurers  thereof  to  do  the  business  per- 
mitted. Any  such  Lloyds  and  inter-insurance  associations  as  may 
be  thus  authorized  to  do  business  in  this  state  (1)  shall  at  all  times 
keep  and  maintain  a  fund  of  an  amount  equal  to  all  outstanding 
claims  and  other  liabilities,  plus  the  unearned  premiums  on  the 
policies  in  force,  calculated  on  the  gross  sums,  without  any  deduc- 


410  The  Insukance  Law.  §  504. 

tion  on  any  account,  charged  to  the  policyholder  on  each  respective 
risk  from  the  date  of  the  policy,  and  in  addition  the  sum  of 
two  hundred  thousand  dollars;  (2)  shall  not  change  the  name 
unxier  Which  business  is  done  without  first  obtaining  the  written 
approval  of  the  superintendent  of  insurance;  (3)  shall  not  estab- 
lish branches  under  other  or  different  names  or  titles;  (4)  shall 
have  its  assets  either  in  cash  or  invested  as  prescribed  by  section 
sixteen  of  this  chapter;  (5)  shall  notify  the  superintendent  of  in- 
surance of  any  change  in  the  location  of  its  principal  office  for  the 
transaction  of  business,  which  office  shall  always  be  in  the  state  of 
i^ew  York,  which  said  notice  shall  be  in  the  form  of  a  declara- 
tion subscribed  and  sworn  to  by  its  attorney  or  attorneys-in-fact; 
(6)  shall  notify  the  superintendent  of  insurance  of  any  change  in 
its  underwriters  or  inter-insurers,  which  notice  shall  be  in  the  form 
of  a  declaration  subscribed  and  sworn  to  by  its  attorney  or  attor- 
neys-in-fact; (7)  shall  not  amend  or  change  its  articles  of  associa- 
tion, copartnership  agreement  or  inter-insurance  contract  without 
the  approval  of  the  superintendent  of  insurance,  and  a  true  copy 
of  any  amendment  or  change  permitted  shall  be  verified  by  an 
torney-in-fact  of  such  Lloyds  or  inter-insurance  associations  and 
be  filed  with  the  superintendent  of  insurance;  (8)  shall  notify 
the  superintendent  of  insurance  of  any  change  in  its  attor- 
ney or  attorneys-in-fact  by  filing  with  the  superintendent  of  in- 
surance an  instrument  revoking  the  designation  or  appointment 
of  any  attorney  or  attorneys-in-fact  who  are  no  longer  to  act  for 
such  underwriters  or  inter-insurers,  and  designating  and  appoint- 
ing one  or  more  attorneys-in-fact,  residents  of  this  state,  with  full 
names  and  addresses,  who  shall  thereafter  be  the  attorney  or 
attorneys-in-fact  for  such  underwriters  or  inter-insurers,  such  in- 
strument to  be  signed  and  sworn  to  by  each  and  every  of  the  un- 
derwriters or  inter-insurers  who  shall  then  be  doing  business  under 
such  authority.  After  any  Lloyds  or  inter-insurance  association 
is  authorized  to  do  busines  in  this  state,  pursuant  to  this  section, 
it  may  be  joined  by  other  and  additional  underwriters  or  inter-in- 
surers,  but  in  that  event  such  underwriters  or  inter-insurers  who 
may  thereafter  join  such  authorized  Lloyds  or  inter-insurance  asso- 
ciation shall  be  held  to  be  bound  by  the  documents  on  file  with 
the  superintendent  of  insurance  concerning  such  Lloydfe  or  inter- 


§  305.  Lloyds  and  Intee-insurees.  411 

insurance  association  in  the  same  manner  as  though  they  had  per- 
sonally signed  the  same,  and  the  attorney  or  attorneys-in-fact  then 
authorized  by  the  underwriters  of  such  Lloyds  or  inter-insurance 
association  to  act  for  them  shall  thereafter  and  subject  to  the  pro- 
visions of  this  section  be  the  attorney  or  attornevs-in-fact  for  such 
additional  underwriters,  and  service  of  a  summons  or  other  legal 
process  on  an  attorney-in-fact  for  the  underwriters  of  such  Lloyds 
or  inter-iusurance  association  whose  appointm'ent  is  in  force  and  so 
filed  with  the  superintendent  of  insurance  shall  be  equivalent  to 
the  personal  service  of  such  process  on  each  and  every  of  such  un- 
derwriters and  interinsurers  within  this  state.  The  funds  re- 
quired by  this  section  to  be  held  by  any  Lloyds  or  inter-insu.rance 
association  and  all  other  undistributed  funds  held  by  it  shall  be 
liable  primarily  for  the  payment  of  any  losses  incurred  under  its 
policies,  and  any  judgments  recovered  under  any  such  policies 
against  the  underwriters  thereon  may  be  satisfied  from  such  funds 
without  regard  to  the  extent  of  the  various  underwriters'  interests 
therein,  and  such  funds  shall  not  be  subject  to  the  claims  of  gen- 
eral creditors  of  any  of  the  underwriters  of  such  Lloyds  or  inter- 
insurance  association,  other  than  policyholder  creditors  whose 
claims  have  arisen  under  their  policies,  until  all  policies  under 
which  any  such  underwriter  is  obligated  have  been  terminated, 
and  in  that  event  the  claims  of  such  general  creditors  shall  not 
be  paid  from  such  fund  or  be  a  lien  upon  any  part  thereof  beyond 
an  amount  which  when  paid  will  leave  intact  and'  ini  the  possession 
of  such  Lloyds  or  inter-insurance  association  an  amount  equal  to 
the  full  unearned  premiums  on  all  policies  in  force  and  in  addi- 
tion the  sum  of  two  hundred  thousand  dollars  as  provided  herein. 
Any  clause  in  any  policy  issued  by  any  such  Lloyds  or  inter-insur- 
ance association  which  shall  contain  any  provision  inconsistent 
with  this  section  shall  be  void. 
Added  by  L.  1911,  chap.  502. 

§  305.  Provisions  for  the  admission  of  Lloyds  and  inter- 
insurance  associations  domiciled  in  other  states. 

On  and  after  July  first,  nineteen  hundred  and  eleven,  the 
superintendent  of  insurance  may  in  his  discretion  issue  a  cer- 
tificate  of  authority  to   a  Lloyds  or  inter-insurance   association 


412  The  Insurance  Law.  §  305. 

domiciled  in  another  state  to  do  such  insurance  business  in  this 
state,  for  permission  to  do  which  application  is  made,  and  as 
may  be  authorized  by  the  articles  of  association,  partnership 
agreement  or  inter-insurance  contract  under  which  such  Lloyds  or 
inter-insurance  association  is  operating,  providing,  however,  that 
in  no  event  shall  authority  be  given  to  any  such  Lloyds  or  inter- 
insurance  association  to  do  other  kinds  of  insurance  business  than 
those  specified  in  sections  one  hundred  and  ten  and  one  hundred 
and  fifty  of  this  chapter.  The  application  for  such  certificate 
shall  specify  the  kinds  of  business  such  Lloyds  or  inter-insurance 
association  desires  authority  to  transact  within  this  state; 
it  must  be  signed  by  the  attorney  or  attorneys-in-fact  for  such 
Lloyds  or  inter-insurance  association  and  must  be  filed  with  the 
superintendent  of  insurance  together  with,  (a)  a  certificate  from 
the  insurance  department  of  its  home  state  that  it  has  and  main- 
tains at  all  times  an  amount  equal  to  all  outstanding  claims  and 
other  liabilities,  plus  the  unearned  premiums  on  all  policies  in 
force,  calculated  on  the  gross  sums,  without  any  deduction  on  any 
account  charged  to  the  policy  holder  on  each  respective  risk  from 
the  date  of  the  policy,  and  in  addition  the  sum  of  two  hundred 
thousand  dollars;  (b)  a  true  copy  of  the  articles  of  association, 
partnerhip  agreement,  or  inter-insurance  contract  of  such  Lloyds 
or  inter-insurance  association,  verified  by  its  attorney  or  attorneys- 
in-fact;  (c)  an  agreement  executed  by  an  attorney  or  attorneys- 
in-fact  for  such  Lloyds  or  inter-insurance  association  in  such  form 
as  the  superintendent  of  insurance  may  prescribe  that  it  will  not 
do  any  business  in  this  state  which  a  domestic  Lloyds  or  inter- 
insurance  association  cannot  do;  (d)  a  declaration  and  agreement 
duly  executed  and  acknowledged  by  each  of  the  underwriters  of 
such  Lloyds  or  inter-insurance  association,  appointing  the  super- 
intendent of  insurance  the  true  and  lawful  attorney  for  such 
Lloyds  or  inter-insurance  association  and  the  underwriters  thereof 
in  and  for  this  state,  upon  whom  all  legal  process  in  any  action 
or  proceeding  against  the  said  Lloyds  or  inter-insurance  associa- 
tion or  the  underwriters  thereof  may  be  served  and  that  any 
service  upon  him  shall  be  equivalent  to  the  personal  service  within 
this  state  of  such  process  on  each  and  every  of  such  underwriters 
or  inter-insurers.     If  any  such  Lloyds  or  inter-insurance  associa- 


§  3-05.  Lloyds  and  Inter-insurers.  41 '> 

tion  is  authorized  to  do  business  in  this  state,  and,  after  such 
authorization,  other  underwriters  or  inter-insurers  desire  to  join 
in  issuing  policies  of  insurance  in  this  state  with  the  underwriters 
or  inter-insurers  who  have  filed  such  declaration  and  agreement, 
they  are  authoiized  to  so  join  upon  filing  similar  declarations  and 
agreements  with  the  superintendent  of  insurance.  The  certificate 
of  authority  of  any  such  Lloyds  or  inter-insurance  association 
shall  be  revoked  by  the  superintendent  of  insurance  if  at  any 
time  it  appears  that  any  underwriters  or  inter-insurers  are  issuing 
policies  of  insurance  within  this  state,  under  apparent  authority 
of  such  certificate  without  filing  such  declaration  and  agreement 
as  aforesaid,  or  if  such  Lloyds  or  inter-insurance  association  does 
not  maintain  at  all  times  the  funds  specified  in  this  section,  or  has 
violated  its  agreement,  or  the  law,  or  is  found  to  be  in  such  a 
condition  that  the  further  transaction  of  business  by  it  will  bo 
hazardous  to  its  policyholders  or  its  creditors  or  to  the  Dublic. 
Added  by  L.  1911,  chap.  502.     . 


414  .  The  Insurance  Law.  §  320. 

ARTICLE  lO^A. 

Mutual  Automobile  Fire  Insurance  Corporations. 

Section  320.  Incorporation. 

32L  Completion  of  organization. 
3^.  Directors  and  officers. 

323.  Meetings;  basis  of  right  to  vote. 

324.  Reserves;    suspension,    cancellation    and    reinstatement    of    cer- 

tificate; expenses. 

325.  Dividends. 

326.  Assessments. 

327.  Reports   to  and   examinations   by   superintendent    of   insurance; 

filing  of  policy  forms. 

328.  Authorization    of     foreign     mutual    automobile     fire     insurance 

corporations. 

§  320.    Incorporation. 

Twenty -five  or  more  person  9  ma}^  become  a  corporation  for  the 
purpose  of  making  insurances  on  the  mutual  plan^  upon  auto- 
mobiles, whether  stationary  or  being  operated  under  their  own 
power,  and  wheresoever  they  may  be,  against  all  or  any  of  the 
hazards  of  fire,  explosion,  transpoTtation,  collision,  loss  by  legal 
liability  for  damage  to  property  resulting  from  the  maintenance 
and  use  of  automobiles,  and  loss  by  burglary  or  theft  or  both, 
including  all  or  any  of  the  risks  of  lake,  river,  canal,  inland  and 
ocean  navigation  and  transportation,  but  not  including  insurance 
against  loss  by  reason  of  bodily  injury  to  the  person.  Such  cor- 
poration may  reinsure  any  risks  taken  by  it.  Incorporation  may 
be  eifected  by  making  and  filing  in  the  office  of  the  superintendent 
of  insurance  a  declaration  signed  by  each  of  the  incoTporators, 
stating  their  intention  to  form  a  corporation  for  the  purposes 
named,  and  setting  forth  a  copy  of  the  charter  which  they  pro- 
posed to  adopt,  which  shall  state  the  name  of  the  proposed  corpora- 
tion (which  name  shall  include  the  word  ''mutual"),  the  place 
where  its  principal  office  is  to  be  located,  the  mode  and  manner 
in  which  its  corporate  powers  are  to  be  exercised,  the  number  of 
its  directors,  a  majority  of  whom  shall  be  citizens  of  this  state, 
the  manner  of  electing  its  directors  and  officers,  the  time  of  such 
elections,  the  manner  of  filling  vacancies,  the  names  and  postoffice 
add'resses  of  the  directors  who  shall  serve  until  the  first  annual 
meeting  of  such  corporation,  the  period  for  the  comniciiccMiiont 
and  termination  of  its  fiscal  year,  and  such  further  particulars  as 
shall  be  necessary  to  explain  and  make  manifcf^t  the  objects  and 
purposes  of  the  corporation.  Such  declaration  slinll  be  |>rovc'd,  or 
acknowledged,  and  recorded  in  a  book  kept  for  that  purpose  by 


§  321.      Mutual  Automobile  Fire  Ins.  Corporations.      415 

the  superintendent  of  insurance,  and  a  certified  copj  thereof  shall 
be  delivered  to  the  persons  executing  the  same.  All  corporations 
hereafter  organized  on  the  mutual  plan  for  the  exclusive  purpose 
of  making  all  or  any  of  the  kinds  of  insurance  specified  in  this 
section  shall  be  incorporated  under  this  article. 
Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 

§  321.    Completion  of  organization. 

Upon  receipt  from  the  superintendent  of  insurance  of  a  certified 
copy  of  the  declaration  of  intention  to  form  a  corporation,  the 
persons  signing  such  declaration  may  open  books  to  receive  appli* 
cations  for  membership  therein.  No  such  corporations  shall  issue 
any  policies  of  insurance  unless,  and  until,  the  persons  signing 
such  declaration  shall  have  previously  published  once  a  week,  for 
at  least  two  successive  weeks,  a  notice  of  their  intention  to  form 
such  a  corporation  in  a  public  newspaper  in  the  county  where  its 
principal  office  is  to  be  located,  nor  until  at  least  one  thousand 
persons  owning  not  less  than  fifteen  hundred  automobiles  have 
agreed  to  become  members  of  such  corporation,  and  have  applied 
for,  and  agreed  to  take  insurance  therein,  covering  one  or  more 
of  the  kinds  of  insurance  specified  in  section  three  hundred  and 
twenty ;  nor  unless  the  annual  premium  cost  of  the  insurance  thus 
agreed  to  be  taken  shall  be  not  less  than  thirty  thousand  dollars 
at  the  rates  charged  by  the  company,  nor  until  the  facts  specified 
in  this  section  have  been  certified  under  oath  to  the  superintendent 
of  insurance  by  at  least  three  of  the  persons  signing  the  original 
certificate  and  the  superintendent  of  insurance  has  issued  a  cer- 
tificate of  authority  to  such  corporation,  authorizing  it  to  begin 
writing  the  insurance  specified  in  this  article;  nor  until  the 
superintendent  of  insurance  shall  be  satisfied  by  .an  examination 
of  the  corporation  or  otherwise  that  the  applications  for  member- 
ship are  bona  fide,  which  applications  shall  state  that  the  appli^ 
cants  agree  to  accept  and  take  the  policies  of  insurance  referred 
to  therein  within  a  period  of  three  months  from  the  date  of  the 
issuance  to  the  corporation  by  the  superintendent  of  insurance 
of  a  certificate  of  authority  to  transact  the  businesis  of  insurance 
specified  in  this  article.  If  at  any  time  the  number  of  members 
insured  shall  fall  below  one  thousand  persons,  and  the  number 
of  cars  insured  falls  below  fifteen  hundred,  or  if  at  any  time  the 
premium  cost  of  the  insurance  as  above  determined,  falls  below 
thirty  thousand  dollars,  no  further  policies  shall  be  issued  by  the 


416  The  Insurance  Law.  §  322. 

corporation  until  other  persons,  wiio,  together  with  existing  mem- 
bers, amount  to  not  less  than  one  thousand  persons,  insuring  not 
less  than  fifteen  hundred  cars,  have  made  bona  fide  applications 
for  insurance  in  the  corporation,  and  until  the  premium  cost  of 
the  insurance,  as  above  determined  shall  be  not  less  than  thirty 
thousand  dollars.  In  the  event  that  such  applications  for  insur- 
ance shall  not  be  obtained  within  a  reasonable  time,  to  be  fixed  by 
the  superintendent  of  insurance,  such  superintendent  may  take  the 
proceedings  for  the  liquidation  of  such  corporation  under  section 
sixty-three  of  this  chapter. 

The  members  of  the  corporation  shall  be  policy-holders  therein, 
and  when  any  member  shall  cease  to  be  a  policy-holder,  he  shall 
cease  at  the  same  time,  to  be  a  member  of  the  corporation.  A 
corporation,  partnership,  association  or  joint  stock  company  may 
become  a  member  of  such  insurance  corporation,  and  may  author- 
ize any  person  to  represent  it  in  such  insurance  corporation,  and 
such  representative  shall  have  all  the  rights  of  any  individual 
member;  but  neither  the  representative  nor  the  said  corporation, 
partnership,  association  or  joint  stock  company  shall  be  subject 
to  any  greater  liability  than  as  if  an  individual  member. 

Such  corporation  may  borrow  money,  or  assume  liability  in  a 
sum  sufficient  to  defray  the  reasonable  expenses  of  its  organization. 
Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 

§  322.    Directors  and  officers. 

Any  such  corporation  shall  have  not  less  than  thirteen  directors, 
and  such  officers  as  shall  be  provided  for  in  the  certificate  of  incor- 
poration or  in  the  by-laws.  By-laws  may  be  adopted  at  a  meeting 
of  the  directors  of  the  corporation  held  after  the  receipt  from 
the  superintendent  of  insurance  of  a  certified  copy  of  the  certifi- 
cate of  incorporation,  and  prior  to  the  first  annual  meeting,  pro- 
vided the  said  by-laws  shall  have  first  been  approved  by  the  super- 
intendent of  insurance.  Thereafter,  by-laws  may  be  made  or 
amended  only  by  the  members;  provided  that  such  by-laws  or 
amendments  shall  have  first  been  approved  by  the  superintendent 
of  insurance.  The  directors  shall  be  elected  at  the  annual  meet- 
ings of  members;  but  at  any  time  after  the  first  annual  meeting 
the  directors  may  be  divided  by  the  board  into  groups,  and  there- 
after one  group  only  elected  at  each  annual  meeting,  in  a  manner 
to  be  pro vi died  by  the  by-laws.  AH  except  four  of  the  directors 
of  the  corporation  elected  after  the  organization  of  the  corporation 


I 


§§  323-325.   Mutual  Automobile  Fire  Ins.  Corporations.    417 

is  completed,  and  it  is  authorized  to  begin  to  issue  insurance 
policies,  must  be  members  of  the  corporation.  All  of  the  officers, 
excepting  assistant  secretaries  and  assistant  treasurers  and  the 
actuary,  must  be  members  of  tho  board  of  directors. 

Added  by  L.  1916,  chap.  14.     In  effect  Feb.  21,  1916. 


§  323.    Meetings;  basis  of  rigiit  to  vote. 

At  all  meetings  of  the  members  of  the  corporation,  each  mem- 
ber shall  have  one  vote  for  each  automobile  owned  and  insured  by 
him  in  the  corporation,  provided  that  no  member  shall  have  more 
than  three  votes. 

Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 


§  324.  Reserves,  suspension;  cancellation  and  reinstate- 
ment of  certificate;  expenses. 

Such  corporation  shall  be  required,  to  maintain  the  same 
reserves  for  the  protection  of  policyholders,  and  others  who  may 
have  a  right  of  action  directly  against  such  corporation,  as  are 
required  to  be  maintained  by  stock  insurance  corporations  in 
relation  to  the  same  class  of  insurance.  The  superintendent  of 
insurance  may  suspend  or  cancel  the  certificate  issued  by  him, 
authorizing  such  corporation  to  transact  such  insurance  business, 
at  any  time,  when  the  assets  of  such  corporation  are  insufficient 
to  insure  and  secure  the  payment  of  its  policy  and  other  obliga- 
tions; and  the  superintendent  of  insurance  may  reinstate,  or 
renew,  said  certificate  whenever,  by  assessment,  or  otherwise,  said 
assets  have  been  increased  to  a  sum  sufficient  to  insure  and  secure 
the  payment  of  the  policy  .and  other  obligations  of  such  corpora- 
tion. The  expenses  of  management  of  such  corporation  shall  not 
exceed  in  any  one  calendar  year  thirty  per  centum  of  its  premium 
income  in  such  year,  but  the  expenses  of  management  shall  not 
be  held  to  include  expenses  incurred  in  the  investigation,  adjust- 
ment and  settlement  of  claims. 

Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 


§  325.    Dividends. 

The  board  of  directors  m<ay  from  time  to  time  fix  and  deter- 
mine, subject  to  the  approval  of  the  superintendent  of  insurance, 


418  The  Insurance  Law.  §§  326,  237. 

the  amount  to  be  declared  and  paid  as  a  dividend,  after  retaining 
sufficient  sums  to  pay  all  outstanding  policy  and  other  obligations. 
Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 

§  326.    Assessments. 

The  corporation  shall  in  its  by-laws  and  policies  fix  the  con- 
tingent mutual  liability  of  the  members  for  the  payment  of  losses 
and  expenses  not  provided  for  by  its  cash  funds  but  such  con- 
tingent liability  of  a  member  shall  not  be  less  than  an  amount 
equal  to  twice  the  amount  of,  and  in  addition  to  the  cash  premium 
written  in  the  policy.  If  the  corporation  is  not  possessed  of  cash 
funds  above  its  unearned  premiums  sufficient  for  the  payment  of 
incurred  losses  and  expenses,  it  shall  make  an  assessment  for  the 
amount  needed  to  pay  such  losses  and  expenses  upon  the  members 
liable  to  assessment  therefor,  in  proportion  to  their  several  lia- 
bility. Every  member  shall  be  liable  to  pay  and  shall  pay  his  pro- 
portionate part  of  any  assessment  which  may  be  laid  by  the 
corporation  in  accordance  with  law  and  his  contract,  on  account 
of  losses  and  expenses  incurred  while  he  was  a  member  if  he  is 
notified  of  such  assessment  within  one  year  after  the  expiration 
of  his  policy.  All  proposed  premium  assessments  shall  be  filed  in 
the  insurance  department  and  shall  not  take  effect  until  approved 
by  the  superintendent  of  insurance,  after  such  investigation  as  he 
may  deem  necessary.  All  funds  of  the  corporation  and  the  con- 
tingent liability  of  the  members  thereof,  shall  be  available  for  the 
payment  of  any  liability  of  the  corporation. 
Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 

§  327.  Reports  to  and  examinations  by  superintendent  of 
insurance;  filing  of  policy  forms. 

Every  such  corporation  shall  make  reports  to  the  superintendent 
of  insurance  at  the  same  times  and  in  the  same  manner  as  are 
required  from  stock  insurance  companies  transacting  the  same 
kind  of  business,  and  the  superintendent  of  insurance  may  exam- 
ine into  the  affairs  of  such  corporation  at  any  time,  either  person- 
ally or  by  any  duly  authorized  examiner  appointed  by  him,  and 
the  superintendent  of  insurance  must  make  such  an  examination 
into  the  affairs  of  said  corporation  at  least  once  in  every  two  years. 

No  such  corporation  shall  isejue  any  policy  of  insurance  until 
a  copy  of  the  form  thereof  has  been  filed  with  the  superintendeuit 
of  insurance. 


§  328.      Mutual  Automobile  Fire  Ins.  Corporations.      419 

§  328.  Authorization  of  foreign  mutual  autamobile  fire 
Insurance  corporations. 

After  January  first,  nineteen  hundred  and  nineteen,  the  super- 
intendent of  insurance  may  issue  a  certificate  of  authority  to  a 
mutual  automobile  fire  insurance  corporation  organized  under  the 
laws  of  any  other  state  or  country,  to  do  such  insurance  business 
in  this  state  provided  that  every  such  foreign  mutual  corporation 
shall  have  the  qualifications  required  of  a  domestic  corporation 
organized  under  this  article,  and  provided  further,  that  in  no 
event,  shall  authority  be  given  to  any  such  foreign  mutual  cor- 
poration organized  to  do  other  kinds  of  insurances  than  those 
specified  in  this  .article.  Such  corporations  shall  be  subject  to  all 
the  provisions  of  law  applicable  to  corporations  organized  under 
this  article. 

Added  by  L.  1916,  chap.  14.    In  effect  Feb.  21,  1916. 


i 


420  The  Insuran^ce  Law.  §  e340. 

ARTICLE  10-B. 

Mutual  Automobile  Casualty  Insurance  Corporations. 

Section  340.  Incorporation. 

341.  Completion  of  organization. 

342.  Directors  and   officers. 

343.  Meetings;  basis  of  right  to  vote. 

344.  Res-erves;    suspension;    cancellation    and    reinstatement    of   cer- 

tificates; expenses. 

345.  Dividends. 

346.  Assessments. 

347.  Reports   to   and  examinations   by  superintendent   of  insurance; 

filing  of  policy  forms. 

348.  Authorization  of  foreign  mutual  automobile  casualty  insurance 

corporations. 

§  340.    Incorporation. 

Twenty-five  or  more  persons  may  become  a  corporation  for  tlie 
purpose  of  making  insurances  on  tlie  mutual  plan  upon  or  per- 
taining to  automobiles,  whether  stationary  or  being  operated 
under  their  own  power,  and  wheresoever  they  may  be,  as  follows : 

(a)  Against  loss  or  damage  resulting  from  accident  to,  or 
injury  suffered  by,  any  person,  and  for  which  the  person  insured 
is  liable; 

(b)  Against  loss  by  burglary  or  theft  or  both  of  such  hazards ; 

(c)  Against  loss  or  damage  to  automobiles  (except  loss  or  dam- 
age by  fire  or  while  being  transported  in  any  conveyance  by  land 
or  water),  including  loss  by  legal  liability  for  damage  to  property 
resulting  from  the  maintenance  and  use  of  automobiles ;  by  mak- 
ing and  filing  in  the  office  of  the  superintendent  of  insurance  ^a 
certificate  to  be  signed  by  each  of  the  incorporators,  stating  their 
intention  to  form  a  corporation  for  the  purposes  named,  and  set- 
ting forth  a  copy  of  the  charter  which  they  propose  to  adopt, 
which  shall  state  the  name  of  the  proposed  corporation  (which 
name  shall,  include  the  word  '' mutual"),  the  place  where  it  is 
to  be  located,  the  mode  and  manner  in  which  its  corporate  powers 
are  to  be  exercised^  the  number  of  its  directors,  a  majority  of 
whom  shall  be  citizens  and  resident®  of  this  state,  the  manner  of 
electing  its  directors  and  officers,  the  time  of  such  elections,  the 
manner  of  filling  vacancies,  the  names  and  postoffice  addresses  of 
the  directors  who  shall  serve  until  the  first  annual  meeting  of  such 
corporation,  and  such  further  particulars  as  shall  be  necessary  to 
explain  and  make  manifest  the  objects  and  purposes  of  the  cor- 
poration.    Such  certificate  shall  be  proved  or  acknowledged,  and 


§  311.     Mutual  Auto.  Casualty  Iks.  CoKPOK^iTiONS.  421 

recorded  in  a  book  kept  for  tke  purpose  by  tbe  superintendent  of 
insurance,  and:  a  certified  copy  tbereof  shall  be  delivered  to  tbe 
persons  executing  tbe  same.  Sucb  corporation  sliall  have  power 
to  reinsure  any  risks  taken  by  it.  All  corporations  hereafter  organ- 
ized on  the  mutual  plan  for  the  exclusive  purpose  of  making  all 
or  any  of  the  kinds  of  insurance  specified  in  this  section  shall  be 
incorporated  undfer  this  article. 

Added  bj  L.  1916,  chap.  14.     In  effect  Feb.  21,  1916. 

§  341.    Completion  of  organization. 

Upon  receipt  of  a  certified  copy  of  the  certificate  of  incor- 
poration from  the  superintendient  of  insurance,  the  persons  sign- 
ing such  certificate  may  open  books  to  receive  applications  for 
membership  therein,  is  o  such  corporation  shall  issue  any  policies 
of  insurance  unless,  and  until,  the  persons  signing  such  certificate 
shall  have  published  notice  of  their  intention  to  form  such  corpora- 
tion in  a  public  newspaper  in  the  county  where  its  principal  office 
is  to  be  located,  once  a  week  for  two  successive  weeks ;  nor  until  at 
least  one  thousand  persons  owning  not  less  than  fifteen  hundred 
automobiles  have  agreed  to  become  members  of  such  corporation, 
and  have  applied  for,  and  agreed  to  take,  insurance  therein,  cov- 
ering one  or  more  of  the  kinds  of  insurance  specified  in  section 
three  hundred  and  forty ;  nor  unless  the  annual  premium  cost  ol 
the  insurance  thus  agreed  to  be  taken  shall  be  not  less  than  fifty 
thousand  dollars  at  the  rates  charged  by  the  company,  nor  until 
the  facts  specified  in  this  section  have  been  certified  under  oath 
to  the  superintendent  of  insurance  by  at  least  three  of  the  persons 
signing  the  original  certificate  and  the  superintendent  of  insur- 
ance has  issued  a  certificate  of  authority  to  such  corporation, 
authorizing  it  to  begin  writing  the  insurance  specified  in  this 
article ;  nor  until  the  superintendent  of  insurance  shall  be  satisfied 
by  an  examination  of  the  corporation  or  otherwise  that  the  appli- 
cations for  membership  are  bona  fide,  which  applications  shall 
state  that  the  applicants  agree  to  accept  and  take  the  policies  of 
insurance  referred  to  therein  within  a  period  of  three  months 
from  the  date  of  the  issuance  to  the  corporation  by  the  superin- 
tendent of  insurance  of  a  certificate  of  authority  to  transact  the 
business  of  insurance  specified  in  this  article.  If  at  any  time  the 
number  of  members  insured  falls  below  one  thousand  and  the 
number  of  cars  insured  falls  below  fifteen  hundred,  or  if  at  any 
time  the  premium  cost  of  the  insurance  as  above  determined,  falls 


422  The  Insurance  Law.  §  342 

below  fifty  thousand  dollars,  no  further  policies  shall  be  issued 
by  the  corporation  until  other  persons,  who,  together  with  the 
existing  members,  amount  to  not  less  than  one  thousand  persons, 
insuring  not  less  than  fifteen  hundred  cars,  have  made  bona  fide 
applications  for  insurance  in  the  corporation;  and  until  the 
premium  cost  of  the  insurance,  as  above  determined,  shall  be  not 
less  than  fifty  thousand  dollars.  In  the  event  that  such  applica- 
tions for  insurance  shall  not  be  obtained  within  a  reasonable  time, 
to  be  fixed  by  the  superintendent  of  insurance,  such  superintendent 
may  take  the  proceedings  for  the  liquidation  of  such  corporation 
under  section  sixty-three  of  this  chapter. 

The  members  of  the  corporation  shall  be  policyholders  therein, 
and  when  any  member  shall  cease  to  be  a  policyholder,  he  shall 
cease  at  the  same  time  to  be  a  member  of  the  corporation.  A  cor- 
poration, partnership,  association  or  joint  stock  company,  may 
become  a  member  of  such  insurance  corporation,  and  may  author- 
ize any  person  to  represent  it  in  such  insurance  corporation,  and 
such  representative  shall  have  all  the  rights  of  any  individual  mem- 
ber; but  neither  the  representative  nor  the  said  corporation, 
partnership,  association  or  joint  stock  company  shall  be  subject 
to  any  greater  liabilitj  thian  as  if  an  individual  member. 

Such  corporation  may  borrow  money,  or  assume  liability,  in  a 
sum  sufficient  to  defray  the  reasonable  expenses  of  its  organization. 
Added  by  L.  1916,  eliap.  13.    In  effect  Feb.  21,  1916. 

§  342.    Directors  and  officers. 

Any  such  corporation  shall  have  not  less  than  thirteen  directors, 
and  such  officers  as  shall  be  provided  for  in  the  certificate  of  incor- 
poration or  in  the  by-laws.  By-laws  may  be  adopted  at  a  meeting 
of  the  directors  of  the  corporation  held  after  the  receipt  from  the 
superintendent  of  insurance  of  a  certified  copy  of  the  certificate 
of  incorporation,  and  prior  to  the  first  annual  meeting,  provided 
the  said  by^-laws  shall  have  first  been  approved  by  the  superin- 
tendent of  insurance.  Thereafter,  by-laws  may  be  made  or 
amended  only  by  the  members ;  provided  that  such  by-laws  or  such 
amendments  shall  have  first  been  approved  by  the  superintendent 
of  insurance.  The  directors  shall  be  elected  at  the  annual  meet- 
ings of  members ;  but  at  any  time  after  the  first  annual  meeting 
the  directors  may  be  divided  by  the  board,  into  groups,  and  there- 
after one  group  only  elected  at  each  annual  meeting,  in  a  manner 
to  be  provided  by  the  by-laws.    All  except  four  of  the  directors  of 


§§  343-345.    Mutual  Auto.  Casualty  Ins.  Cokpor.vtions.    423 

the  corporation  elected  after  the  organization  of  the  corporation 
is  completed,  and  it  is  authorized  to  begin  to  issue  insurance 
policies,  must  be  members  of  the  corporation.  All  of  the  officers, 
excepting  assistant  secretaries  and  assistant  treasurers  and  the 
actuary,  must  be  members  of  the  board  of  directors. 
Added  by  L.  1916,  dhap.  13.     In  effect  Feb.  21,  1916. 


§  343.    Meetings;  basis  of  right  to  vote. 

At  all  meetings  of  the  members  of  the  corporation,  each  mem- 
ber shall  have  one  vote  for  each  automobile  owned  and  insured  by 
him  in  the  corporation,  provided  that  no  member  shall  have  more 
than  three  votes. 

Added  by  L.  1916,  dhap.  13.    In  effect  Feb.  21,  1916. 


§  344.  Reserves;  suspension;  cancellation  and  reinstate- 
ment of  certificates;  expenses. 

Such  corporation  shall  be  required  to  maintain  the  same 
reserves  for  the  protection  of  policyholders  and  others  who  may 
have  a  right  of  action  directly  against  such  corporation,  as  are 
required  to  be  maintained  by  stock  insurance  corporations  in 
relation  to  tiie  same  class  of  insurance.  The  superintendent  of 
insurance  may  suspend  or  cancel  the  certificate  issued  by  him, 
authorizing  such  corporation  to  transact  such  insurance  business, 
at  any  time  when  the  assets  of  such  corporation  are  insufficient  to 
insure  and  secure  the  payment  of  its  policy  and  other  obligations ; 
and  he  may  reinstate  or  renew  said  certificate  whenever  by  assess- 
ment or  otherwise  said  assets  have  been  increased  to  a  sum  suf- 
ficient to  insure  and  secure  the  payment  of  the  policy  and  other 
obligations  of  such  coi-poration.  The  expenses  of  management  of 
any  such  corporation  shall  not  exceed  in  any  one  calendar  year 
thirty  per  centum  of  its  premium  income  in  such  year,  but  the 
expenses  of  management  shall  not  be  held  to  include  expenses 
incurred  in  the  investigation,  adjustment  and  settlement  of  claims. 

Added  by  L.  1916,  dhap.  13.     In  effect  Feb.  21,  1916. 

§  345.    Dividends. 

The  board  of  directors  may  from  time  to  time  fix  and  deter- 
mine,  subject  to  the  approval  of  the  superintendent  of  insurance, 


424  The  Insurance  Law.  §§  34G,  317. 

the  amount  to  be  declared  and  paid  as  a  dividend,  after  retaining 
sufficient  sums  to  pay  all  outstanding  policy  and  other  obligations. 

Added  by  L.  1916,  ohap.  13.     In  effect  Feb.  21,  1916. 


§  346.    Assessments. 

The  corporation  shall  in  its  by-laws  and  policies  fix  the  con- 
tingent mutual  liability  of  the  members  for  the  payment  of  losses 
and  expenses  not  provided  for  by  its  cash  funds;  but  such  con- 
tingent liability  of  a  member  shall  not  be  less  than  an  amount 
equal  to  twice  the  amount  of,  and  in  addition  to,  the  cash  premium 
written  in  the  policy.  If  the  corporation  is  not  possessed  of  cash 
funds  above  its  unearned  premium  sufficient  for  the  payment  of 
the  incurred  losses  and  expenses,  it  shall  make  an  assessment  for 
the  amount  needed  to  pay  such  losses  and  expenses  upon  the 
members  liable  to  assessment  therefor,  in  proportion  to  their  sev- 
eral liability.  Every  member  shall  be  liable  to  pay  and  shall 
pay  his  proportionate  part  of  any  assessment  which  may  be  laid 
by  the  corporation  in  accordance  with  law  and  his  contract,  on 
account  of  losses  and  expenses  incurred  while  he  wass  a  member,  if 
he  is  notified  of  such  assessment  within  one  year  after  the  expira- 
tion of  his  policy.  All  proposed  premium  assessments  shall  be 
filed  in  the  insurance  department  and  shall  not  take  eifect  until 
approved  by  the  superintendent  of  insurance,  after  such  investiga- 
tion as  he  may  deem  necessary.  All  funds  of  the  corporation  and 
the  contingent  liability  of  the  members  thereof  shall  be  available 
for  the  payment  of  any  liability  of  the  corporation, 

Added  by  L.  1916,  ohap.  13.     In  effect  Feb.  21,  1916. 


§  347.  Reports  to  and  examinations  by  superintendent  of 
insurance;  filing  of  policy  forms. 

Every  such  corporation  shall  make  reports  to  the  superintendent 
of  insurance  at  the  same  time  and  in  the  same  manner  as  are 
required  from  stock  insurance  comp'anies  transacting  the  same 
kind  of  business,  and  the  superintendent  of  insurance  may  exam- 
ine into  the  affairs  of  such  corporation  at  .any  time,  either  person- 
ally or  by  any  duly  authorized  examiner  appointed  by  him,  and 
the  superintendent  of  insurance  must  make  such  an  examination 
into  the  affairs  of  said  corporation  at  least  once  in  every  two  years. 


§  348.     Mutual  Auto.  Casualty  Ins.  Corporations.  425 

No  such  corporation  shall  issue  any  policy  of  insurance  until  a 
copy  of  the  form  thereof  has  been  filed  with  the  superintendent  of 
insurance. 

Added  by  L.  1916,  chap.  13.     lu  effect  Feb.  21,  1916. 

§  348.  Authorization  of  foreign  mutual  automobile  casualty 
insurance  corporations. 

Aft-er  January  one,  nineteen  hundred  and  nineteen,  the  super- 
intendent of  insurance  may  issue  a  certificate  of  authority  to  a 
mutual  automobile  casualty  insurance  corporation  organized 
under  the  laws  of  any  other  state  or  country,  to  do  such  insur- 
ance business  in  this  state  provided  that  every  such  foreign  mutual 
corporation  shall  have  the  qualifications  required  of  a  domestic 
corporation  organized  under  this  article  and  provided  further, 
that  in  no  event  shall  authority  be  given  to  any  such  foreign 
mutual  corporation  organized  to  do  other  kinds  of  insurances  than 
those  specified  in  this  article.  Such  corporation  shall  be  subject  to 
all  the  provisions  of  law  applicable  to  corporations  organized  under 
this  article. 

Added  by  L.  1916,  (^hap.  13.     In  effect  Feb.  21,  1916. 


426  The  Insurance  Law.  §§  360,  361. 


AKTICLE  11. 

Laws  Repealed;  Constkuction ;  When  to  Take  Effect. 

Section  360.  Laws  repealed. 

361.  When  to  take  effect. 

§  360.    Laws  repealed. 

Of  the  laws  enumerated  in  the  schedule  hereto  annexed,  that 
portion  specified  in  the  last  column  is  hereby  repealed. 
Afl  renumbered  bj  L.  1898,  chap.  85,  S  2. 

§  361.    When  to  take  effect. 

This  chapter  shall  take  effect  immediately. 
As  renumbered  by  L.  1898,  chap.  85,  S  2. 


I 


SCHEDULE  OF  LAWS  REPEALED, 


Revised  Statutes Part  1,  chapter  20,  title  21, All 

Laws  of  Chapter  Section 

1814 49 All 

1814 172 All 

1817 146 All 

1821 148 All 

1824 277 All 

1828 21 1,  nil  168,  176,  232.  328,  419 

(2d  Meet.) 

1829 336 All 

1837 30 AU 

1840 287 All 

1848 205 All 

1849 178 All 

1849 308 All 

r,    1851 95 All 

1851 188 All 

1852 71 All 

1852 123 All 

\   1853 463 All 

1853 466 All 

1853 528 All 

1853 651 All 

1854 10 All 

i    1854 224 All 

1864 369 All 

1855 75 AU 

1855... 292 All 

1857 28 AU  ' 

1857 38 AU 


k 


428  iSciiEDULE  OS  Laws  Repeai^ed. 


Laws  of 

Chapter 

Section 

1857 

.,   469 

..  All 

1857 

..   648 

..  All 

1857 

..  739 

..  AU 

1858 

..  255 

..  AU 

1858 

..  285 

..  AU 

1859 

..  168 

..  All 

1859 

..  263 

..  AU 

1859 

..  366 

..  All 

1860...... 

..  153 

..  All 

1860 

..  328 

..  AU 

1860 

..  403 

..  AU 

1861 

80 

..  All 

1861 

..   92 

..  All 

1861 

. .  326...... 

..  AU 

1861 

..  334 

..  All 

1862 

6 

..  All 

1862 

. .  300 

..  AU 

1862 

. .  347 

..  AU 

1862 

..  367 

..  AU 

1862 

. .  412 

..  All 

1863  . 

.  242 

AU 

L864 

. .  425 

..  AU 

1864 

. .  563 

..  AU 

1865 

. .   199 

..  AU 

1865 

.  328 

..  AU 

1865 

. .  694 

..  AU 

1866 

. .  298 

. .  AU 

1866 

. .  514 

. .  AU 

1866 

. .  625 

..  AU 

1866 

..  577 

..  AU 

1866 

. .  785 

. .  AU 

1866 

..  826 

..  AU 

1866. 

. .  828 

..  AU 

1866 

..  843 

..  AU 

'Schedule 

OF  Laws  Kepealed. 

Laws  of 

Chapter 

Section 

1867 

91 

,..  All 

1867 

..  441 

...  AU 

1867 

..  442 

..  AU 

1867 

..   574 

...  All 

1867 

..  708 

. . .  All 

1867 

..  709 

...  All 

1868 

..  118 

..  All 

1868 

..  318 

...  AU 

1868 

..  482 

. . .  AU 

1868 

..  623 

,..  AU 

1868 

..  731 

. . .  AU 

1868 

..  732 

...  AU 

1869 

..  404 

...  All 

1869 

..  634 , 

...  AU 

1869 

..  829 

. . .  AU 

1869 

..  902 

...  AU 

1870 

..  476 , 

...  AU 

1871 

..   608 

. . .  AU 

1871 

. .  709 

...  All 

1871 

. .  888 

. . .  AU 

1872 

. .  100 

...  AU 

1872 

.  .   235 

...  AU 

1873 

...   561 

. . .  AU 

1873 

...  593 

...  All 

1873 

. ..   614 

...  AU 

1873 

.  ..   617 

...  AU 

1873 

. ..   688 

...  AU 

1873...... 

. ..  849 

...  All 

1873 •., 

...  851 

. . .  AU 

1873 

...  867 

...  AU 

1874 , 

...  189 

. . .  AU 

1874 , 

. ..  331 

...  AU 

1874 

. ..  560 

. . .  AU 

1875 

60 

. . .  AU 

429 


430 

iSCHEDULE 

OF  Tmws  Repealed. 

Laws  of 

Chapter 

Section 

1876 

..  170 

..  All 

1875 

..  208 

..  All 

1875 

..  423 

..  All 

1875 

..  466 

..  All 

1876 

..  655 

..  All 

1876 

..  341 

..  AU 

1876 

..  367 

..  AU 

1876 

..  369 

..All 

1877 

..  183 

..  All 

1877 

..  209 

..  AU 

1877 

..  211 

..  All 

1877 

..  229 

..  AU 

1877 

..  241 

. .  AU 

1877 

..  321 

..  AU 

J877 

..  423 

..  AU 

1877 

..  439 

..  AU 

1878 

..   98 

..  AU 

1878 

..  138 

..  AU 

1878 

..  282 

..  All 

1878 

..  337 

..  All  . 

1878 

..  412 

..  AU 

1879 

..  163 

..  AU 

1879 

..  161 

..  AU 

1879 

. .  287 

..  AU 

1879 

..  347 

..  AU 

1879 

..  486 

..  AU 

1879 

..  489 

..  AU 

1879 

..  490 

..  AU 

1880 

..   22 

..  AU 

1880 

..  110 

..  AU 

1880 

..  168 

..  AU 

1880 

. .  222 

..  AU 

1880 

..  362 

..  AU 

1880 

..  397 

. .  AU 

I 


Schedule 

OF  Laws  Repealed. 

Laws  of 

Chapter 

Section 

18.8-0 

..  427 

..  All 

1880 

.  .  42'8 

. .  All 

1880 

..  462 

..  All 

1881 

..  171 

..  All 

1881 

..  256 

..  All 

1881 

..  305 

..  All 

1881 

..  434 

..  AU 

1881 

..  463 

..All 

1881 

..  471 

..  All 

1881 

..  484 

..  All 

1881 

..  486 

..  All 

1881 

..  560 

..  All 

1881 

..  583 

..  All 

1881 

..   600 

..  All  . 

1881 

..   628 

..  All 

1881 

..  671 

..  All 

1882 

38 

..  All 

1882 

..  218 

..  All 

1882 

..  236 

..  All 

1882 

. .  243 

..  All 

1882 

..  282 

. .  All 

1882 

..  312 

..  All 

1882 

. .  371 

..  All 

1883 

..   20 

..  AU 

1883 

..  175 

..  AU 

1883 

. .  455 

..  AU 

1884 

54 

..  AU 

1884 

..   95 

..  AU 

1884 

. .   116 

..  AU 

1884 

. .   132 

..  AU 

1884 

. .  285 

..  2,  3 

1884 

. .   341 

..  AU 

1884 

. .  345 

..  AU 

1884 

. .   346 

..  AU 

431 


U2 

Schedule 

OF  Tmws  Repealed. 

Laws  of 

Chapter 

Section 

1884 

..  353 , 

. . .  All 

1885 

..   113 , 

. . .  All 

1885 

..  276 

. . .  All 

1885 

..  327 

. . .  All 

1885 

..  328 

. . .  All 

1885 

..  334 , 

. . .  All 

1885 

..  401 

. . .  All 

1886 

..  416 

...  All 

1885 

..  538 

. . .  All 

1886 

..  207 

...  All 

1886 

..  394 

. . .  All 

1886 

..  436 

. . .  All 

1886 

. .  488 

...  All 

1886 

..  566 

. . .  All 

1886 

..  573 

. . .  All 

1886 

..  604 

, . .  All 

1886 

..  611 

. . .  All 

1886 

..  612 

. . .  All 

1887 

..  144 

. . .  All 

1887 

..  167 

. . .  All 

1887 

..  215 

. . .  All 

1887 

..  285 

...'  All 

1887 

. .  328 

, . .  All 

1887 

..  429 

, . .  All 

1887 

..  481 

, . .  All 

1887 

..  520 

, . .  All 

1887 

..  610 

,..  AU 

1887 

. .  650 

. .  All 

1888 

..  511 

, . .  All 

1888 

..  517 

, . .  All 

1889 

..  184 

. .  All 

1889   

..  203 

. .  All 

1889 

..  282 

, . .  All 

1889 

. .  338 

, . .  All 

Schedule 

OF  Laws  Eepealed. 

Laws  of 

Chapter 

Section 

1889 

..  424 

...  All 

1889 

..  464 

...  All 

1889 

..  620 

. . .  All 

1889 

..  666 

. . .  All 

1890 

..  302 

...  All 

1890 

•  •       ^\)\)   •••••! 

...  All 

1890 

..  401 

, . .  All 

1890 

..  402 

, . .  All 

1890 

..  406 

, . .  All 

1890 

..  552 

, . .  All 

1891 

..   80 

, . .  All 

1891 

..  119 

, . .  All 

1892 

..  641 

, . .  All 

1892 

..  654 

, . ,  All 

1892 

..   690 

. .  All 

1893 

..  112 

,..  All 

1893 

..  14T 

. . .  All 

1893 

..  687 

. .  All 

1893 

..  690 

. .  All 

1893 

..  Y20 

..  All 

1893 

..  725 

. .  All 

1894 

..  271 

. .  All 

1894 

..  399 

..  All 

1894 

..  609 

..  All 

1894 

..  611 

..  All 

1894 

..  616 

. .  All 

1894 

. .  684 

..  All 

1895 

..  178 

..  All 

1895 

, .  585 

..  All 

1895 

. .  917 

..  All 

1895 

. .  995 

..  All 

1896 

. .   23 

..  All 

1896 

. .   38 

..  All 

1896 

..  322 

..  All 

433 


4sM 

(Schedule 

OF  Laws  Kepealed. 

Laws  of 

Chapter 

Section 

1896 

..   841 

. . .  All 

1896 

..  844 

. .  All 

1896 

..  845 

..  AU 

1896 

..   860 

. .  All 

1896 

..  907 

..  All 

1897 

..   29 

. .  All 

1897 

..   218 

. .  All 

1897 

..   345 

. .  All 

1897 

..   387 

..All 

1897 

..  448 

. .  All 

1897 

..  493 

. .  All 

1897 

..   503 

..  All 

1898 

85 

. .  All 

1898 

..   140 

. .  All 

1898 

..   147 

..  All 

1898 

..  171 

. .  All 

1898 

..  465 

..  All 

1898 

..   654 

. .  All 

1899 

..   85 

. .  All 

1899 

..   143 

..All 

1899 

..   165 

..  AU 

1899 

..   166 

. .  AU 

1899 

..   693 

..  AU 

1900 

..  266 

,  AU 

1900 

..   366 

. .  AU 

1900 

..   641. 

. .  AU 

1901 

..  142 

..  AU 

1901 

..   346 

..  All 

1901 

..   397 

..  AU 

1901 

..   513 

..  AU 

1901 

..   514 

. .  AU 

1901 

..   634 

..  AU 

1901 

..   635 

..  AU 

1901 

..  677 

..  All 

(Schedule 

OF  Laws  Kepealed. 

Laws  of 

Chapter 

Section 

1901 

..  722 

. . .  All 

1901 

..  726 

. . .  All 

1902 

..  162 

. . .  All 

1902 

..  297 

. . .  AH 

1902 

..  437 

...  AU 

1903 

..  106 

. . .  All  ~ 

1903 

..  135 

. . .  All 

1903 

..  450 

...  AU 

1903 

..  471 

. . .  All 

1903 

..  530 

...  AU 

1903 

..  566 

...  AU 

1904 

..  146 

. . .  AU 

1904 

..  451 

...  AU 

1904 

..  468 

. . .  All 

1904 

..  543 

. . .  AU 

1904 

..  551 

,..  AU 

1904 

..  708 

. . .  AU 

1904 

..  759 

, . .  AU 

1905 

..  113...,., 

. . .  All. 

1905 

..  217 

, . .  AU 

1905 

..  251 

. . .  All 

1905 

..  566 

. . .  AU 

1905 

..  567 

, . .  AU 

1905 

.   568 

AU 

1905 

..   569 

, . .  AU 

1905 

..  573 

. . .  AU 

1905 

..  574 

. . .  AU 

1906 

. .  123 

. .  All 

1906 

. .  326 

. .  AU 

1906 

..  354 

, . .  AU 

1907 

..  206 

. .  All 

1907 

..  239 

, . .  AU 

1907 

..  273 

. .  AU 

1907 

..  285 

. .  AU 

435 


4,36 

Schedule 

OF  Laws  Repealed. 

Laws  of 

Chapter 

Section 

1907 

..      388 

.  .     All 

1907 

..     503 

..     All 

1907 

..      623 

..     All 

1907 

..      625 

. .     All 

1907 

..     714 

..     All                ;     . 

1907 

..     729 

. .     All 

1908 

9 

..All 

1908 

..     346 

. .     All 

1908 

..     347 

..     AU 

INDEPENDENT  STATUTES 

RELATING  TO 

INSURANCE  COMPANIES. 

ARSON  IN  SECOND  DEGREE. 
Penal  Law,  §  222. 

§  222.  Arson  in  second  degree. 

A  person  who: 

1.  Commits  an  act  of  burning  in  the  day  time,  which,  if  com- 
mitted in  the  night  time,  would  be  arson  in  the  first  degree ;  or, 

2.  Wilfully  burns,  or  sets  on  fire,  in  the  night  time,  a  dwelling 
house,  wherein,  at  the  time,  there  is  no  human  being ;  or, 

3.  Wilfully  bums,  or  sets  on  fire,  in  the  night  time,  a  building 
not  inhabited,  but  adjoining  or  within  the  curtilage  of  an  in- 
habited building,  in  which  there  is,  at  the  time,  a  human  being, 
so  that  the  inhabited  building  is  endangered,  even  though  it  is 
not  in  fact  injured  by  the  burning;  or, 

4.  Wilfully  bums,  or  sets  on  fire,  in  the  night  time,  a  car, 
vessel,  or  other  vehicle,  or  a  structure  or  building,  ordinarily 
occupied  at  night  by  a  human  being,  although  no  person  is  within 
it  at  the  time;  or 

5.  Wilfully  bums,  or  sets  on  fire,  a  vessel,  car,  or  other  vehicle, 
or  a  building,  structure,  or  other  erection,  which  is  at  the  time  in- 
sured against  loss  or  damage  by  fire,  with  intent  to  prejudice  or 
defraud  the  insurer  thereof. 

Is  guilty  of  arson  in  the  second  degree. 

MISCONDUCT  OF  OFFICERS. 
Penal  Law,  §  665. 

§  665.  Misconduct  of  directors,  officers,  agents  and  em- 
ployees of  corporations. 

A  director,  officer,  agent  or  employee  of  any  corporation  or 
joint-stock  association  who: 

1.  Knomngly  receives  or  possesses  himself  of  any  of  its  prop- 
erty otherwise  than  in  payment  for  a  just  demand,   and  with 


438  Penal  Law. 

intent  to  defraud,  omits  to  make  or  to  cause  or  direct  to  be  made 
a  full  and  true  entry  thereof  in  its  books  and  accounts ;  or, 

2.  Makes  or  concurs  in  making  any  false  entry,  or  concurs  in 
omitting  to  make  any  material  entry  in  its  books  or  accounts;  or, 

3.  Knowingly  (a),  concurs  in  making  or  publishing  any  written 
report,  exhibit  or  statement  of  its  affairs  or  pecuniary  condition 
containing  any  material  statement  which  is  false,  or  (b),  omits 
or  concurs  in  omitting  any  statement  required  by  law  to  be  con- 
tained therein ;  or, 

4.  Having  the  custody  or  control  of  its  books,  wilfully  refuses 
or  neglects  to  make  any  proper  entry  in  the  stock  book  of  such 
corporation  as  required  by  law,  or  to  exhibit  or  allow  the  same 
to  be  inspected,  and  extracts  to  be  taken  therefrom  by  any  person 
entitled  by  law  to  inspect  the  same,  or  take  extracts  therefrom ;  or, 

5.  If  a  notice  of  an  application  for  an  injunction  affecting  the 
property  or  business  of  such  joint-stock  association  or  corporation 
is  served  upon  him,  omits  to  disclose  the  fact  of  such  servico  and 
the  time  and  place  of  such  application  to  the  other  directors, 
officers  and  managers  thereof ;  or, 

6.  Refuses  or  neglects  to  make  any  report  or  statement  lawfully 
required  by  a  public  officer. 

Is  guilty  of  a  misdemeanor. 

discriminatiolnts  and  rebates. 

Penal  Law,  §  1191. 

§  1191.  Discriminations  and  rebates  by  life  insurance  corpo- 
rations prohibited. 

Any  life  insurance  corporation  or  corporation  transacting  the 
business  of  life  insurance  on  the  co-operative  or  assessment  plan 
doing  business  in  this  state,  or  any  officer  or  agent  thereof,  who : 

1.  Makes  any  discrimination  in  favor  of  individuals  of  the 
same  class  or  of  the  same  expectation  of  life  either  in  the  amount 
of  the  premium  charged  or  in  any  return  of  premiums,  dividends 
or  other  advantages;  or. 


Penal  Law.  439 

2.  Makes  any  contract  for  insurance  or  agreement  as  to  such 
contract  other  than  that  which  is  plainly  expressed  in  the  policy 
issued;  or, 

3.  Pays  or  allows,  or  offers  to  pay  or  allow  as  an  inducement 
to  any  person  to  insure,  any  rebate  or  premium,  or  any  special 
favor  or  advantage  whatever,  in  the  dividends  to  accrue  thereon 
or  any  inducement  whatever  not  specified  in  the  policy;  or, 

4.  Makes  any  distinction  or  discrimination  between  white 
persons  and  colored  persons,  wholly  or  partially  of  African  de- 
scent, as  to  the  premiums  or  rates  charged  for  policies  upon  the 
lives  of  such  persons,  or  in  any  other  manner  whatever;  or  de- 
mands or  requires  a  greater  premium  from  such  colored  persons 
than  is  at  that  time  required  by  such  company  from  white  persons 
of  the  same  age,  sex,  general  condition  of  health  and  prospect  of 
longevity;  or  makes  or  requires  any  rebate,  diminution  or  dis- 
count upon  the  amount  to  be  paid  on  such  policy  in  case  of  the 
death  of  such  colored  persons  insured,  or  inserts  in  the  policy 
any  condition,  or  makes  any  stipulation  whereby  such  person  in- 
sured shall  bind  himself,  or  his  heirs,  executors,  administrators 
and  assigns  to  accept  any  sum  less  than  the  full  value  or  amount 
of  such  policy  in  case  of  a  claim  accruing  thereon  by  reason  of, 
the  death  of  such  person  insured,  other  than  such  as  are  imposed 
upon  white  persons  in  similar  cases,  is  guilty  of  a  misdemeanor. 
N"othing  in  this  section  shall  be  construed  to  require  any  corpora- 
tion doing  business  under  articles  six  or  seven  of  the  insurance 
law,  which  limits  and  confines  its  business  or  membership  to  the 
members  of  a  secret  or  fraternal  order  or  body,  to  insure  or  accept 
any  individual  who  is  not  a  member  of  such  secret  or  fraternal 
order  or  body. 

Note.— This  section  is  in  effect  Sept.  1,  1913. 

ACTING  FOE  FOEEIGN  INSUEANCE  OOEPOEATIOK 
Penal  Law,  §  1199. 

§  1199.  Acting  for  foreign  Insurance  corporation  which  has 
not  designated  superintendent  of  insurance  as  attorney. 

Any  person  acting  for  himself  or  for  others  who  solicits  or 
procures,  or  aids  in  the  solicitation  or  procurement  of  policies  or 


440  Penal  Law. 

certificates  of  insurance  from,  or  adjusts  losses  or  in  any  manner 
aids  the  transaction  of  any  business  for,  any  foreign  insurance 
corporation,  which  has  not  executed  and  filed  in  the  office  of  the 
superintendent  of  insurance,  a  written  appointment  of  the  super- 
intendent to  be  the  true  and  lawful  attorney  of  such  corporation 
in  and  for  this  state,  upon  whom  all  lawful  process  in  any  action 
or  proceeding  against  the  corporation  may  be  served,  is  guilty 
of  a  misdemeanor. 

Note.— Tihis  section  is  in  effect  Sept.  1,  1913. 

REBATES. 
;  >  Penal  Law,  §  1200. 

§  1200.  Any  person  knowingly  receiving  any  rebate  or  allow- 
ance or  deduction  from  any  premium,  or  any  valuable  thing, 
special  favor  or  advantage  whatever,  as  an  inducement  to  take 
any  policy  of  life  insurance,  not  specified  in  the  policy  is  guilty  of 
a  misdemeanor.  No  person  shall  be  excused  from  attending  and 
testifying,  or  producing  any  books,  papers  or  other  documents 
before  any  court  or  magistrate,  upon  any  investigation,  proceeding 
or  trial,  for  a  violation  of  any  of  the  provisions  of  this  section, 
upon  the  ground  or  for  the  reason  that  the  testimony  or  evidence, 
documentary  or  otherwise,  required  of  him  may  tend  to  convict 
him  of  a  crime  or  to  subject  him  to  a  penalty  or  forfeiture;  but 
no  person  shall  be  prosecuted  or  subjected  to  any  penalty  or  for- 
feiture for  or  on  account  of  any  transaction,  matter  or  thing  con- 
cerning which  he  may  so  testify  or  produce  evidence,  documentary 
or  otherwise,  and  no  testimony  so  given  or  produced  shall  be  re- 
ceived against  him  upon  any  criminal  investigation  or  proceeding. 

FALSE  LITERATURE. 
Penal  Law,  §  1203 

§  1203.    Issue  or  circulation  of  false  literature. 

Any  insurance  corporation,  or  any  officer,  director  or  agent 
thereof  who  shall  issue  or  circulate  or  cause  or  permit  to  be  issued 
or  circulated  in  this  state  any  illustration,  circular  or  statement 
indicating  that  such  corporation  can  transact  in  this  state  any  busi- 


Tax  Law.  441 

ness  of  a  cliaracter  other  than  that  which  it  is  authorized  to  trans- 
act under  the  certificate  of  authority  issued  to  it  by  the  superin- 
tendent of  insurance,  shall  be  guilty  of  a  misdemeanor,  and  the 
superintendent  of  insurance  shall  revoke  the  certificate  of  author- 
ity of  the  corporation  or  agent  on  a  conviction  for  so  offending. 
Note. — This  section  takes  effect  Sept.  1,  1913. 

PERJUKY. 
Penal  Law,  §  1627. 

§  1627.    Contradictory  statements  under  oath. 

In  any  prosecution  for  perjury  the  falsity  of  the  testimony  or 
statement  set  forth  in  the  indictment  shall  be  presumptively  estab- 
lished by  proof  that  the  defendant  has  testified,  declared,  deposed 
or  certified  under  oath  to  the  contrary  thereof  in  any  other  written 
testimony,  declaration,  deposition,  certificate,  affidavit  or  other 
writing  by  him  subscribed. 

FEANCHISE  TAX   ON  II^SURAI^CE  CORPORATIONS. 

Tax  Law,  §  187. 

§  187.    Franchise  tax  on  insurance  corporations. 

An  annual  state  tax  for  the  privilege  of  exercising  corporate 
franchises  or  for  carrying  on  business  in  their  corporate  or  or- 
ganized capacity  within  this  state  equal  to  one  per  centum  on  the 
gross  amount  of  premiums  received  during  the  preceding  calendar 
year  for  business  done  at  any  tina©  in  this  state,  which  gross 
amount  of  premiums  shall  include  all  premiums  received  during 
such  preceding  calendar  year  on  all  policies,  certificates,  renewals, 
policies  subsequently  canceled,  insurance  and  reinsurance  during 
such  preceding  calendar  year,  and  all  premiums  that  are  received 
during  such  preceding  calendar  year  on  all  policies,  certificates, 
renewals,  policies  subsequently  canceled,  insurance  and  reinsur- 
ance executed,  issued  or  delivered  in  all  years  prior  to  such  pre- 
ceding calendar  year,  whether  such  premiums  were  in  the  form 
of  money,  notes,  credits  or  any  other  substitute  for  money,  shall 


442  Tax  Law. 

be  paid  annually  into  the  treasury  of  the  state  on  or  before  the 
first  day  of  June  by  the  following  corporations : 

1.  Every  domestic  insurance  corporation,  incorporated,  organ- 
ized or  formed  under,  by  or  pursuant  to  a  general  or  special  law ; 

2.  Every  insurance  corporation,  incorporated,  organized  or 
formed  under,  by  or  pursuant  to  the  laws  of  any  other  state  of 
the  United  States,  and  doing  business  in  this  state,  except  a  cor- 
poration doing  a  fire  insurance  business  or  a  marine  insurance 
business ; 

3.  Every  insurance  corporation,  incorporated,  organized  or 
formed  under,  by  or  pursuant  to  the  laws  of  any  state  without  the 
United  States,  or  of  any  foreign  country,  except  such  a  corpora- 
tion doing  a  life,  health  or  casualty  insurance  business,  and  doing 
business  in  this  state;  but  the  tax  on  gross  premiums  of  a  corpo- 
ration so  incorporated,  organized  or  formed  and  doing  a  fire  or 
marine  insurance  business  within  the  state  shall  be  equal  to  five- 
tenths  of  one  per  centum.  This  section  does  not  apply  to  a  fra- 
ternal beneficiary  society,  order  or  association,  a  corporation  for 
the  insurance  of  domestic  animals,  a  town  or  county  co-operative 
insurance  corporation,  nor  to  any  corporation  subject  to  the  super- 
vision of  or  required  by  or  in  pursuance  of  law  to  report  to  the 
superintendent  of  banks;  but  this  section  does  apply  to  an  indi- 
vidual, or  partnership,  or  association  of  underwriters  known  as 
Lloyds  in  so  far  as  corporations  doing  the  same  kind  of  insurance 
business  are  subject  to  its  provisions.  The  taxes  imposed  by  this 
section  shall  be  in  addition  to  all  other  fees,  licenses  or  taxes 
imposed  by  this  or  any  other  law,  except  that  in  assessing  taxes 
under  the  reciprocal  provisions  of  section  thirty-four  of  the  insur- 
ance law,  credit  shall  be  allowed  for  any  taxes  paid  under  this 
section.  The  term  "  insurance  corporation  "  as  used  in  this 
article,  shall  include  a  corporation,  association,  joint-stock  com- 
pany or  association,  person,  society,  aggregation  or  partnership  by 
whatever  name  known  doing  an  insurance  business  in  this  state. 


Tax  Law.  443 

KEPOETS  OF  COEPOEATIO:NrS. 
Tax  Law,  §  192. 

§  192.    Reports  of  corporations. 

Corporations  liable  to  pay  a  tax  under  this  article  shall  report 
as  follows: 
********** 

5.  Insurance  corporations.  Every  insurance  corporation  liable 
to  pay  a  tax  under  section  one  hundred  and  eighty-seven  of  this 
chapter,  shall,  on  or  before  March  first  in  each  year,  make  a 
written  report  to  the  comptroller  of  its  condition  at  the  close  of 
its  business  on  December  thirty-first  preceding,  stating  the  gross 
amount  of  all  premiums  referred  to  in  section  one  hundred  and 
eighty-seven  of  this  chapter,  received  during  the  preceding  calen- 
dar year  on  business  done  thereby  in  this  state  during  the  year 
ending  with  such  day  and  at  all  times  prior  thereto,  whether  the 
premiums  were  in  money  or  in  the  form  of  notes,  credits  or  other 
substitutes  for  money. 

VALUE  OF  STOCK  TO  BE  APPEAISED. 
Tax  Law,  §  193. 

§  193.    Value  of  stock  to  be  appraised. 

If  the  dividend  or  dividends  amount  to  less  than  six  per  cen- 
tum on  the  par  value  of  the  capital  stock,  or  no  dividend  is  de- 
clared, the  president,  treasurer  or  secretary  of  the  company  liable 
to  pay  a  tax  under  the  provisions  of  section  one  hundred  and 
eighty-two  of  this  chapter,  shall,  under  oath,  between  the  first  and 
fifteenth  days  of  ^N'ovember  in  each  year,  estimate  and  appraise 
the  capital  stock  of  such  company  at  its  actual  value. 

And  shall  forward  the  same  to  the  comptroller  with  the  report 
provided  for  in  the  last  section.  If  the  comptroller  is  not  satisfied 
with  the  valuation  so  made  and  returned  he  is  authorized  and  em- 
powered to  make  a  valuation  thereof,  and  settle  an  account  upon 
the  valuation  so  made  by  him,  and  the  taxes,  penalties  and  in- 
terest to  be  paid  the  state. 


444  Tax  Law. 

FURTHER  REQUIREMENTS  AS  TO  REPORT'S  OF  COR- 
PORATIONS. 
Tax  Law,  §  194. 

§  194.    Further  requirements  as  to  reports  of  co'-porations. 

Every  report  required  by  this  article  shall  have  annexed  thereto 
the  affidavit  of  the  president,  vice-president,  secretary  or  treasurer 
of  the  corporation,  association  or  joint-stock  company  or  of  the 
person  or  one  of  the  persons,  or  the  members  of  the  partnership 
making  the  same,  to  the  effect  that  the  statements  contained  therein 
are  true.  Such  reports  shall  contain  any  other  data,  information 
or  matter  which  the  comptroller  may  require  to  be  included 
therein,  and  he  may  prescribe  the  form  in  which  such  reports  shall 
be  made  and  the  form  of  oath  thereto.  When  so  prescribed  such 
forms  shall  be  used  in  making  the  report.  The  comptroller  may 
require  at  any  time  a  further  or  supplemental  report  under  this 
article,  which  shall  contain  information  and  data  upon  such  mat- 
ters as  the  comptroller  may  specify. 

PAYMENT  OF  TAX  AND  PENALTY  FOR  FAILURE. 
Tax  Law,  §  197. 

§  197.    Payment  of  tax  and  penalty  for  failure. 

A  tax  imposed  by  section  one  hundred  and  eighty-two  or  one 
hundred  and  eighty-six  of  this  chapter  shall  be  due  and  payable 
into  the  state  treasury  on  or  before  the  fifteenth  day  of  January 
in  each  year.  A  tax  imposed  by  section  one  hundred  and  eighty- 
four  of  this  chapter  on  a  transportation  or  transmission  corpora- 
tion, or  by  section  one  hundred  and  eighty-five,  on  elevated  rail- 
roads or  surface  railroads  not  operated  by  steam,  shall  be  due 
and  payable  into  the  state  treasury  on  or  before  the  first  day  of 
August  in  each  year.  A  tax  imposed  by  section  one  hundred  and 
eighty-seven  of  this  chapter  on  an  insurance  corporation  shall  be 
due  and  payable  into  the  state  treasury  on  or  before  the  first  day 
of  June  in  each  year.  A  tax  imposed  by  section  one  hundred  and 
eighty-eight  or  one  hundred  and  eighty-nine  shall  be  due  and  pay- 
able into  the  state  treasury  on  or  before  the  first  day  of  Septem- 


Personal  Property  Law.  445 

ber  in  each  year.  A  tax  imposed  bj  section  one  hundred  and 
ninety-one  of  this  chapter  on  a  foreign  banker  shall  be  due  and 
payable  into  the  state  treasury  on  or  before  February  first  in 
each  year.  If  such  tax  in  any  case  is  not  paid  within  thirty  days 
after  the  same  becomes  due,  or  if  the  report  of  any  such  corpo- 
ration is  not  made  within  the  time  required  by  this  article,  the 
corporation,  association,  joint-stock  company,  person  or  partner- 
ship, liable  to  pay  the  tax,  shall  pay  into  the  state  treasury,  in 
addition  to  the  amount  of  such  tax,  a  sum  equal  to  ^ve  per  cen- 
tum thereof,  and  one  per  centum  additional  for  each  month  the 
tax  remains  unpaid,  which  sum  shall  be  added  to  the  tax  and 
paid  or  collected  therewith.  Every  corporation,  association,  joint- 
stock  company,  person  or  partnership  failing  to  make  the  annual 
report  required  by  this  article  or  failing  to  make  any  special 
report  required  by  the  comptroller,  within  any  reasonable  time  to 
be  specified  by  him,  shall  forfeit  to  the  people  of  the  state  the  sum 
of  one  hundred  dollars  for  every  such  failure,  and  the  additional 
sum  of  ten  dollars  for  each  day  that  such  failure  continues.  Such 
tax  shall  be  a  lien  upon  and  bind  all  the  real  and  personal  prop- 
erty of  the  corporation,  joint-stock  company  or  association  liable 
to  pay  the  same  from  the  time  when  it  is  payable  until  the  same  is 
paid  in  full. 

PEESO^^AL  PEOPEETY  NOT  ALIENABLE  IN  CEETAIN 

CASES. 
Personal  Property  Law^  §  15. 

§  15.    Personal  property  not  alienable  in  certain  cases. 

1.  The  right  of  the  beneficiary  to  enforce  the  performance  of 
a  trust  to  receive  the  income  of  personal  property,  and  to  apply 
it  to  the  use  of  any  person,  cannot  be  transferred  by  assignment 
or  otherwise.  But  the  right  and  interest  of  the  beneficiary  of 
any  other  trust  in  personal  property  may  be  transferred.  Pro- 
vided, however,  that  when  the  proceeds  of  a  life  insurance  policy, 
becoming  a  claim  by  death  of  the  insured,  are  left  with  the  in- 
surance company  under  a  trust  or  other  agreement,  the  benefits 
accruing  thereunder  after  the  death  of  the  insured  shall  not  be 


446  Legislative  Law. 

transferable,  nor  subject  to  commutation  or  incumbrance,  nor  to 
legal  process  except  in  an  action  to  recover  for  necessaries,  if  the 
parties  to  the  trust  or  other  agreement  so  agree. 

EEGULATIOlSr  OF  ACTIOK 

Code  Civil  Procedure^  §  1761. 

§  1761.  Regulation  when  action  brought  by  either  husband 
or  wife. 

Whenever  the  relation  of  husband  and  wife  ceases  by  the  entry 
of  a  judgment  dissolving  the  marriage,  the  defendant  guilty 
of  adultery  is  not  entitled  to  any  interest  in  any  policy  of  insur- 
ance on  the  life  of  the  plaintiff,  wherein  such  defendant  is  named 
as  a  beneficiary,  and  the  plaintiff  may  apply  to  the  court  grant- 
ing the  final  decree  or  to  a  special  term  of  the  supreme  court  on 
notice  to  the  defendant,  or  the  attorney  who  appeared  for  defend- 
ant in  action  for  divorce,  and  to'  the  insurance  company  issuing 
the  policy  or  policies,  for  an  order  directing  the  insurance  com- 
pany issuing  the  policy  or  policies  to  substitute  therein  such 
beneficiary  as  the  plaintiff  may  nominate.  In  case  where  it  is 
shown  that  the  defendant  has  contributed  from  his  or  her  separate 
estate  toward  the  payment  of  the  premiums  on  such  policy,  the 
court  shall  grant  such  order  on  such  terms  as  in  the  discretion  of 
the  court  shall  be  equitable.  This  section  shall  also  apply  in  like 
manner  when  the  defendant  obtains  a  decree  against  the  plain- 
tiff on  a  counterclaim. 

Note.— This  section  takes  effect  Sept.  1,  1913. 

LEGISLATIVE  APPEARANCES. 
Legislative  Law. 

§  Q6.  Every  person  retained  or  employed  for  compensation  as 
counsel  or  agent  by  any  person,  firm,  corporation  or  association  to 
promote  or  oppose  directly  or  indirectly  the  passage  of  bills  or 
resolutions  by  either  house  or  to  promote  or  oppose  executive 


Legislative  Law.  447 

approval  of  such  bills  or  resolutions,  shall,  in  each  and  every 
year,  before  any  service  is  entered  upon  in  promoting  or  opposing 
such  legislation,  file  in  the  oifice  of  the  secretary  of  state  a  writing 
subscribed  by  such  counsel  or  agent  stating  the  name  or  names  of 
the  person  or  persons,  firm  or  firms,  corporation  or  corporations, 
association  or  associations,  by  whom  or  on  whose  behalf  he  is 
retained  or  employed,  together  with  a  brief  description  of  the 
legislation  in  reference  to  which  such  service  is  to  be  rendered. 
No  notice  so  filed  shall  be  valid  for  more  than  thirty  days  after 
the  adjournment  of  the  session  of  the  legislature  held  in  the  year 
in  which  the  same  is  filed.  It  shall  be  the  duty  of  the  secretary 
of  state  to  provide  a  docket  to  be  known  as  the  docket  of  legisla- 
tive appearances,  with'  appropriate  blanks  and  indices,  and  to  fortli- 
with  enter  therein  the  names  of  the  counsel  and  agents  so  retained 
or  employed  and  of  the  persons,  firms,  corporations  or  associations 
retaining  or  employing  them,  together  with  a  brief  description 
of  the  legislation  in  reference  to  which  the  service  is  to  be  rendered, 
which  docket  shall  be  open  to  public  inspection.  Upon  the  ter- 
mination of  such  employment  the  fact  of  such  termination,  with 
the  date  thereof,  mav  be  entered  by  direction  of  either  such  counsel 
or  agent  or  of  the  employer.  'No  person,  firm,  corporation  or 
association  shall  retain  or  employ  any  person  to  promote  or  oppose 
legislation  for  p-ompensation  contingent  in  whole  or  in  part  upon 
the  passage  or  defeat  of  any  legislative  measure  or  measures.  No 
person  shall  for  compensation  engage  in  promoting  or  opposing 
legislation  except  upon  appearance  entered  in  accordance  with  the 
foregoing  provisions  of  this  section.  And  no  person  shall  accept 
any  such  employment  or  render  any  such  service  for  compensation 
contingent  upon  the  passage  or  defeat  of  any  legislative  measure  or 
measures.  It  shall  be  the  duty  of  every  person,  firm,  corporation 
or  association  within  two  months  after  the  adjournment  of  the  legis- 
lature to  file  in  the  office  of  the  secretary  of  state  an  itemized  state- 
ment verified  by  the  oath  of  such  person,  or  in  case  of  a  firm  of  a 
member  thereof,  or  in  case  of  a  domestic  corporation  or  association 


448  LBGisiiATiVE  Law. 

of  an  officer  thereof,  or  in  case  of  a  foreign  corporation  or  associa- 
tion of  an  officer  or  agent  thereof,  showing  in  detail  all  expenses 
paid,  incurred  or  promised  directly  or  indirectly  in  connection 
with  legislation  pending  at  the  last  previous  session,  with  the 
names  of  the  payees  and  the  amount  paid  to  each,  including  all 
disbursements  paid,  incurred  or  promised  to  counsel  or  agents,  and 
also  specifying  the  nature  of  said  legislation  and  the  interest  of  the 
person,  firm,  corporation  or  association  therein.  The  provisions, 
however,  of  this  section  requiring  docket  entries  shall  not  apply 
to  duly  accredited  counsel  or  agents  of  counties,  cities,  towns,  vil- 
lages, public  boards  and  public  institutions.  And  the  provisions 
hereof  shall  not  be  construed  as  affecting  professional  services  in 
•  drafting  bills  or  in  advising  clients  and  in  rendering  opinions  as 
to  the  construction  and  eifect  of  proposed  or  pending  legislation 
where  such  professional  service  is  not  otherwise  connected  with 
legislative  action.  Every  person,  every  member  of  any  firm,  and 
every  association  or  corporation  violating  any  provision  of  this 
section  and  every  person  causing  or  participating  in  a  violation 
thereof  shall  be  guilty  of  a  misdemeanor  and,  in  case  of  an  indi- 
vidual, shall  be  punishable  by  imprisonment  in  a  penitentiary  or 
county  jail  for  not  more  than  one  year  or  by  a  fine  of  not  more 
than  one  thousand  dollars  or  by  both,  and,  in  case  of  an  association 
or  corporation,  by  a  fin©  of  not  more  than  one  thousand  dollars. 
And  in  addition  to  the  penalties  hereinbefore  imposed  any  corpora- 
tion or  association  failing  to  file  the  statement  of  legislative  ex- 
penses within  the  time  required  shall  forfeit  to  the  people  of  the 
state  the  sum  of  one  hundred  dollars  per  day  for  each  day  after 
the  expiration  of  the  two  months  within  which  such  statement  is 
required  to  be  filed,  to  be  recovered  in  an  action  to  be  brought  by 
the  attorney-general. 


Independent  Statutes.  449 

EEINCOEPOEATION  —  FOREIGN  MONEYED 
CORPORATION. 

CHAP.  733  OF  1900. 

AN  ACT  to  provide  for  the  reincorporation  under  the  laws  of 

this  state  of  foreign  moneyed  corporations. 

Became  a  law  May  2,  1900,  with  the  approval  of  the  Governor.     Passed, 
three-fifths   (being   present. 

The  People  of  the  State  of  New  York,  represented  in  Senate 
a^d  Assembly,  do  enact  as  follows: 

Section  1.  Any  moneyed  corporation  duly  organized  by  or 
under  the  laws  of  any  state  of  the  United  States,  and  having  an 
office  or  doing  business  in  this  state,  may  file,  if  a  banking  cor- 
poration or  authorized  to  make  loans  upon  pledges  or  deposits, 
in  the  office  of  the  superintendent  of  the  banking  department, 
and  if  an  insurance  corporation  in  the  office  of  the  superintendent 
of  the  insurance  department,  the  documents  described  in  section 
two  of  this  act,  and  such  documents  shall  be  recorded  as  original 
certificates  of  incorporation  are  required  by  law  to  be  recorded. 
The  fees  for  filing  and  recording  such  documents,  together  with 
the  tax,  if  any,  required  by  law  to  be  paid  before  the  incorpora- 
tion of  a  domestic  company  of  the  same  class,  must  be  paid  before 
filing. 

§  2.  The  documents  to  be  filed  by  any  such  corporation  shall 
include, 

1.  A  copy  of  its  charter,  certificate  of  incorporation,  or  other 
document  constituting  it  a  body  corporate,  with  such  amend- 
ments, if  any,  as  are  desired  by  the  corporation  or  are  required 
by  the  laws  of  New  York,  authenticated  as  an  original  certificate 
of  incorporation  is  required  to  be  authenticated. 

2.  A  declaration  of  its  desire  to  become  a  corporation  of  this 
state  and  of  its  submission  to  the  laws  of  this  state,  duly  executed 
by  the  authority  of  the  body  in  which  its  corporate  powers  are 
vested. 


450  Independent  Statutes. 

3.  A  certificate  of  the  superintendent  of  that  department  Id 
which  these  papers  are  filed  that  the  charter,  certificate  of  incor- 
poration or  other  constituent  document,  with  its  proposed  amend- 
ments, if  any,  as  filed,  is  in  all  respects  consistent  with  the  laws 
of  this  state  relating  to  domestic  corporations  of  the  same  class; 
that  the  corporation  applicant  has  complied  with  all  conditions 
imposed  by  its  laws  upon  domestic  corporations  of  the  same  class 
beginning  business  in  this  state,  with  the  exception  of  any  pro- 
vision concerning  the  residence  of  a  majority  of  the  corporators, 
trustees,  or  directors  of  such  corporation;  that  its  name  is  not 
the  same  with  the  name  of  any  domestic  corporation  nor  likely 
to  be  confounded  with  any  such  name,  and  that  it  has  paid  all 
fees  and  taxes  due  from  it  to  the  state,  including  the  tax,  if  any, 
imposed  by  this  state  upon  the  original  incorporation  of  a 
company  of  the  same  class. 

§  3.  From  the  date  of  filing  these  documents  the  corporation 
shall  become  and  be  a  corporation  of  this  state,  and  shall  be 
subject  to  all  the  laws  of  this  state  applicable  to  corporations  of 
the  same  class;  but  its  existence  and  powers  as  such  corporation 
shall  terminate  if  it  shall  fail  at  any  time  for  one  month  to 
maintain  an  office  within  the  state  at  which  an  authorized  officer 
or  agent  shall  be  present  at  all  reasonable  business  hours,  pre- 
pared to  exhibit  the  books  of  the  company  to  the  proper  authori- 
ties of  this  state  and  to  receive  service  of  process;  or  if  it  shall 
fail  within  two  years  to  terminate  its  corporate  existence  derived 
from  any  other  state,  by  surrender  of  its  charter  or  by  dissolution. 

§  4.  This  act  shall  take  effect  immediately. 

BAIL  —  AUTOMOBILES. 
CHAP.  538  OF  1904.    §  6,  SUB,  3. 

Sub.  3.    Release  from  custody,  bail,  et  cetera. 

In  case  the  owner  of  a  motor  vehicle  shall  be  taken  into  custody 
because  of  a  violation  of  any  provision  of  this  act,  he  shall  be  forth- 
with taken  before  an  accessible  captain  or  a  sergeant  or  acting  ser- 


Independent  Statutes.  451 

geant  of  police  in  any  city  or  village,  or  any  justice  of  the  peace  or 
magistrate,  and  be  entitled  to  an  immediate  hearing;  and  if  such 
hearing  cannot  then  be  had  be  released  from  custody  on  giving  a 
bond  or  undertaking  executed  by  a  fidelity  or  surety  company  or- 
ganized under  the  laws  of  this  state  and  having  a  deposit  of  at  least 
two  hundred  thousand  dollars  with  the  superintendent  of  insurance 
of  this  state,  said  bond  or  undertaking  to  be  in  an  amount  not 
exceeding  the  maximum  fine  for  the  offence  with  which  the  owner 
is  charged  and  to  be  conditioned  for  the  owner's  appearance  in 
answer  for  such  violation,  at  such  time  and  place  as  shall  then  be 
indicated;  or  on  giving  his  personal  undertaking  to  appear  in 
answer  for  such  violation,  at  such  time  and  place  as  shall  then  bp 
indicated,  secured  by  the  deposit  of  a  sum  equal  to  the  maximum 
fine  for  the  offense  with  which  he  is  charged,  or  in  lieu  thereof,  by 
leaving  the  motor  vehicle,  being  operated  by  such  person  with 
such  officer;  or  in  case  such  officer  is  not  accessible,  be  foithwith 
released  from  custody  on  giving  his  name  and  address  to  the 
officer  making  such  arrest,  and  depositing  with  such  officer  a  sum 
equal  to  the  maximum  fine  for  the  offense  for  which  such  arrest  is 
made,  or  in  lieu  thereof,  by  leaving  the  motor  vehicle,  being: 
operated  by  such  person,  with  such  officer,  provided,  that  in  such 
case  the  officer  making  such  arrest  shall  give  a  receipt  in  writing 
for  such  sum  or  vehicle  and  notify  such  person  to  appear  beforfi 
the  most  accessible  magistrate,  naming  him,  on  that  or  the  follow- 
ing day,  specifying  the  place  and  hour.  In  case  security  shall  be 
deposited,  as  in  this  subdivision  provided,  it  shall  be  returned  to 
the  person  depositing,  forthwith  on  such  person  giving  a  bond  or 
undertaking  of  a  fidelity  or  surety  company,  as  in  this  section 
provided,  or  on  such  person  being  admitted  to  bail  as  provided 
in  section  five  hundred  and  fifty-four  of  the  code  of  criminal  pro- 
cedure, and  the  return  of  any  receipt  or  other  voucher  given  at 
the  time  of  such  deposit.  In  case  such  undertaking  of  a  fidelity 
or  surety  company  be  not  given,  or  such  personal  undertaking 
with  security  or  such  deposit  shall  not  be  made  by  an  owner  so 
taken  into  custody,  the  provisions  of  section  five  hundred  and 
fifty-four  of  ihe  code  of  criminal  procedure,  shall  apply. 


GENERAL    CORPORATION 
LAW. 

CHAPTER  28  OF  1909. 

ClIAPTEE  23  OF  THE  CONSOLIDATED  LawS. 

Article     1.  Short  title;  classification;  definition  (§§1-3). 

2.  General  provisions  (§§  4-44). 

3.  Change  of  name  (§§  60-65). 

4.  Sale  of  corporate  real  property   (§§  70-76). 

5.  Judicial  supervision  of  corporation  and  of  the  officers  and  mem 

bers   thereof    (§§   90-92). 

6.  Action    for    sequestration,    action    for    dissolution    and    action 

to  enforce  individual  liability   of  officers   and  members  of 
corporation    (§§   100-116). 

7.  Action  to  annul  corporation  (§§  130-136). 

8.  Action  to  dissolve  moneyed  corporation  (§§  150-161). 

0.    Proceedings   for  voluntary   dissolution   of  corporation    (§§    170- 

10.  Dissolution  of  stock   corporation  without  judicial   proceedings 

(§§  220,  221). 
10a.  Provisions  applicable  to  temporary  and  permanent  receivera  of 
corporations  (§§  226,  227). 

11.  Powers,    duties     and    liabilities     of    receivera     of    corporation: 

(§§  230-278). 

12.  Provisions  applicable  to  two  or  more  of  th«  foregoing  proceed- 

ings or  actions  (§§  300-316). 

13.  Alteration  and  repeal  of  charter  of  corporation  (§§  320,  321). 

14.  Laws  repealed;  construction;  when  to  take  effect  (§§  330-332). 

AETICLE  1. 
Short  Title;  Classification;  Definitions. 

Section     1.    Short   title. 

2.  Classification  of  corporations, 

3.  Definitions, 


General  Corporation  Law. 

ARTICLE  2. 

General  Provisions. 

Section    4.  Qualifications  of  incorporators. 

5.  Filing  and  recording  certificates  of  incorporation. 

6.  Corporate  names. 

7.  Amended   and   supplemental   certificates. 

8.  Lost  or  destroyed  certificates. 

9.  Certificate  and  other  papers  as  evidence;  evidence  of  e<  nsoli.i  i 

tion. 

10.  Limitation  of  powers;  provisions  of  certificate. 

11.  Grant  of  general  powers. 

12.  Enlargement  of  limitations  upon  the  amount  of  the  property 

of  non-stock  corporations. 

13.  Acquisition  of  additional  real  property. 

14.  Acquisition  of  property  without  the  state. 

15.  Certificate  of  authority  of  a  foreign  corporation. 

16.  Proof  to  be  filed  before  granting  certificate. 

17.  Reincorporation  of  foreign  moneyed  corporations. 

18.  Papers  to  be  filed  upon  reincorporation. 

19.  When  reincorporation  effective  and  effect  thereof. 

20.  Acquisition  of  real  property   in  this   state   by  certain   foreign 

corporations. 

21.  Acquisition    by    foreign    corporation    of    real    property    in    this 

state. 

22.  Prohibition  of  banking  powers. 

23.  Qualification  of  members  as  voters. 

24.  Cumulative  voting. 

25.  Voting  trust  agreements. 
28.  Proxies. 

27.  Challenges. 

28.  Effect  of  failure  to  elect  directors. 

29.  Mode  of  calling  special  election  of  directors. 

30.  Mode  of  conducting  special  election  of  directors. 

31.  Qualification  of  voters  and  canvass  of  votes  at  special  election. 

32.  Powers  of  supreme  court  respecting  elections. 

33.  Stay  of  proceedings  in  actions  collusively  brought. 

34.  Quorum  of  directors  and  powers  of  majority. 

35.  Directors  as  trustees  in  case  of  dissolution. 

36.  Forfeiture   for  non-user. 

37.  Extension  of  corporate  existence. 

38.  Revival  of  corporate  existence. 

39.  Approval  of  certificates  of  extension  or  revival;  when  required 

40.  Extension  when  stock  is  owned  by  another  corporation, 

41.  Effect  of  extension. 

42.  When  notice  of  lapse  of  time  unnecessary. 

43.  As  to  acts  of  directors. 

44.  Political  contributions  prohibited;   penalty. 


§§   1,  2,  3.  General  Corporation  Law. 

§  1.    Short  title. 

This  chapter  shall  be  known  as  the  "  General  Corporation  Law." 

§  2.    Classification  of  corporations. 

A  corporation  shall  be  either, 

1.  A  municipal  corporation, 

2.  A  stock  corporation,  or 

3.  A  non-stock  corporation. 

A  stock  corporation  shall  be  either 

1.  A  moneyed  corporation, 

2.  A  railroad  or  other  transportation  corporation,  or 

3.  A  business  corporation.    . 

A  non-stock  corporation  shall  be  either, 

1.  A  religious  corporation, 

2.  A  membership  corporation,  or 

3.  Any  corporation  other  than  a  stock  corporation. 

A  reference  in  a  general  law  to  a  class  of  corporations  described 
in  accordance  with  this  classification  shall  include  all  oorporationB 
theretofore  formed  belonging  to  such  class. 

§  3.    Definitions. 

1.  A  "  municipal  corporation  "  includes  a  county,  town,  school 
district,  village  and  city  and  any  other  territorial  division  of  the 
state  established  by  law  with  powers  of  local  government. 

2.  A  "  stock  corporation  "  is  a  corporation  having  a  capital 
stock  divided  into  shares,  and  which  is  authorized  by  law  to  dis- 
tribute to  the  holders  thereof  dividends  or  shares  of  the  surplus 
profits  of  the  corporation.  A  corporation  is  not  a  stock  corpora- 
tion because  of  having  issued  certificates  called  certificates  of  stock, 
but  which  are  in  fact  merely  certificates  of  membership,  and  which 
is  not  authorized  by  law  to  distribute  to  its  members  any  divi- 
dends or  share  of  profits  arising  from  the  operations  of  the 
corporation. 

3.  The  term  "  non-stock  corporation  "  includes  every  corpora- 
tion other  than  a  stock  corporation. 


General  Coepoeation  Law.  §  3. 

4.  A  "  moneyed  corporation  ''  is  a  corporation  formed  under  or 
subject  to  the  banking  or  the  insurance  law. 

5.  A  "  domestic  corporation  "  is  a  corporation  incorporated  by 
or  under  the  laws  of  the  state  or  colony  of  ITew  York.  Every  cor- 
poration which  is  not  a  domestic  coi-poration  is  a  foreign  corpo- 
ration, except  as  provided  by  the  code  of  civil  procedure  for  the 
purpose  of  construing  such  code. 

6.  The  term  "  directors,"  when  used  in  relation  to  corporations, 
shall  include  trustees  or  other  persons,  by  whatever  name  known, 
duly  appointed  or  designated  to  manage  the  affairs  of  the 
corporation. 

7.  The  term  "  certificate  of  incorporation  "  shall  include  ar- 
ticles of  association  or  any  other  written  instruments  required  by 
law  to  be  filed,  to  effect  the  incorporation  of  a  corporation,  includ- 
ing a  certified  copy  of  an  original  certificate  of  incorporation  filed 
for  such  purpose  in  pursuance  of  law. 

8.  The  term  "  member  of  a  corporation  "  shall  include  every 
person  having  a  right  to  vote  at  a  meeting  of  the  corporation  for 
the  election  of  directors,  other  than  a  person  having  a  right  to  vote 
only  upon  a  proxy. 

9.  The  term  "  ofiice  of  a  coi'poration  "  means  its  principal  office 
within  the  state,  or  principal  place  of  business  within  the  state 
if  it  has  no  principal  office  therein. 

10.  The  term  "  business  of  a  corporation,"  when  used  with  ref- 
erence to  a  non-stock  corporation,  includes  the  operations  for  the 
conduct  of  which  it  is  incorporated. 

11.  The  term  *^  corporate  law"  or  "laws,"  when  used  in  any 
law  forming  a  part  of  the  consolidation  of  the  general  laws  of  the 
state  of  which  this  chapter  is  a  part,  means  the  general  statutes 
of  this  state  relating  to  corj>orations  included  in  such  consolidation. 

12.  The  existence  of  an  easement  in  real  property  acquired  or 
reserved  by  a  municipal  corporation,  a  railroad  corporation  or 
other  transportation  corporation,  shall  not  be  deemed  an  encum- 
brance upon  such  real  property  under  any  law  relating  to  invest- 
ments in  mortgages  upon  real  property  by  corporations,  trustees, 
executors,  administrators,  guardians  or  other  persons  holding  trust 


4,  5.  Genebal  Cobpoeation  Law. 


funds,  but  the  effect  of  such  an  easement  upon  the  real  property 
which  it  affects,  shall  be  taken  into  consideration  in  determining 
the  value  thereof. 

Amended  by  L.  1914,  chap.  128.    In  eflFect  April  6,  1914. 
Chap.  128  of  L.  1914,  adds  subd.   12. 


§  4.    Qualifications  of  incorporators. 

A  certificate  of  incorporation  must  be  executed  by  natural  per- 
sons, who  must  be  of  full  age,  and  at  least  two-thirds  of  them 
must  be  citizens  of  the  United  States  and  one  of  them  a  resident 
of  this  state.  This  section  shall  not  apply  to  a  corporation  formed 
by  the  reincoi-poration  or  consolidation  of  existing  corporations,  or 
to  the  reorganization  of  a  corporation  upon  the  sale  of  the  property 
and  franchises  of  a  previously  existing  corporation  or  otherwise. 

§  5.    Filing  and  recording  certificates  of  incorporation. 

1.  Every  certificate  of  incorporation  and  every  amended 
or  supplemental  certificate,  and  every  certificate  which 
alters  the  provisions  of  any  certificate  of  incorporation 
or  any  amended  or  supplemental  certificate  hereafter  ex- 
ecuted, shall  be  in  the  English  language,  and  except  as 
otherwise  provided  by  law,  shall  be  filed  in  the  office  of  the 
secretary  of  state,  and  shall  be  by  him  duly  recorded  and  in- 
dexed 111  books  specially  provided  therefor,  and  a  certified  copy 
of  such  certificate  or  amended  or  supplemental  certificate  with  a 
certificate  of  the  secretary  of  state  of  such  filing  and  record,  or  a 
duplicatiC  original  of  such  certificate  or  amended  or  supplemental 
certificate  shall  be  filed  and  similarly  recorded  and  indexed  in 
the  office  of  the  clerk  of  the  county  in  which  the  office  of  the 
corporation  is  to  be  located,  or,  if  it  be  a  non-stock  corporation, 
and  such  county  be  not  determined  upon  at  the  time  of  executing 
the  certificate  of  incorporation,  in  such  county  clerk's  office  as  the 
judge  approving  the  certificate  shall  direct.  Nothing  herein  con- 
tained, however,  shall  be  deemed  to  prohibit  a  corporation  from 
having  and  using  a  corporate  name  or  title  in  a  language  other 
than  the  English  language  if  the  same  be  in  English  letters  or 
characters.  All  taxes  required  by  law  to  be  paid  before  or  upon 
incorporation  and  the  fees  for  filing  and  recording  such  certificate 
must  be  paid  before  filing.     No  corporation  shall  exercise  any  cor- 


General  Coeporation  Law.  §  6. 

porate  powers  or  privileges  until  such  taxes  and  fees  have  been 
paid. 

2.  Whenever  under  any  law  now  or  heretofore  in  force  the  cer- 
tificate of  incorporation  of  any  corporation  other  than  a  stock  cor- 
poration was  or  is  required  to  be  filed  in  more  than  one  public 
ofiice,  a  certified  copy  of  such  certificate  so  filed  in  any  one  of 
such  public  offices  may  be  filed  in  such  other  office  with  the  like 
effect  as  if  the  original  had  been  duly  filed  therein,  provided,  how- 
ever, that  no  rights  accrued  prior  to  the  filing  of  such  copy  shall  be 
impaired  or  affected  thereby,  provided  also,  that  such  filing  of  a 
copy  shall  not  cause  a  duplication  or  similarity  of  corporate  names 
in  violation  of  the  next  succeeding  section. 

Amended  by  L.  1913,  dhap.  479. 

§  6.    Corporate  names. 

1.  IsTo  certificate  of  incorporation  of  a  proposed  corporation 
having  the  same  name  as  a  corporation  authorized  to  do  business 
under  the  laws  of  this  state,  or  a  name  so  nearly  resembling  it  as 
to  be  calculated  to  deceive,  shall  be  filed  or  recorded  in  any  office 
for  the  purpose  of  effecting  its  incorporation,  or  of  authorizing  it 
to  do  business  in  this  state;  nor  shall  any  corporation  except  a 
religious,  charitable  or  benevolent  corporation  or  bar  asso- 
ciation be  authorized  to  do  business  in  this  state  unless 
its  name  has  such  word  or  words,  abbreviation,  affix  or 
prefix,  therein  or  thereto,  as  will  clearly  indicate  that  it 
is  a  corporation  as  distinguished  from  a  natural  person, 
firm,  or  copartnership;  or  unless  such  corporation  uses 
with  its  corporate  name,  in  this  state,  such  an  affix  or  prefix. 
A  corporation  formed  by  the  reincorporation,  reorganization 
or  consolidation  of  other  corporations  or  upon  the  sale  of  the 
property  or  franchises  of  a  corporation,  or  a  corporation  acquii^ 
ing  or  becoming  possessed  of  all  the  estate,  property,  rights, 
privileges  and  franchises  of  any  other  corporation  or  corporations 
by  merger,  may  have  the  same  name  as  the  corporation  or  one 
of  the  corporations  to  whose  franchises  it  has  succeeded.  No 
corporation  shall  be  hereafter  organized  under  the  laws  of  this 
state,  with  the  word  "  trust,"  "  bank,"  "  banking,"  "  insurance," 
"  assurance,"  "  indemnity,"  "  guarantee,"  "  guaranty,"  "  title," 
"  casualty,"  ''  surety,"  "  fidelity,"  "  savings,"  "  investment," 
"loan"  or  "benefit"  as  part  of  its  name,  except  a  corporation 
formed  under  the  banking  law  or  the  insurance  law. 


§§  7,  S.  Generat.  Cokpokation  Law. 

2.  No  corporation,  society  or  association,  whether  now  existing 
or  hereafter  organized  under  or  by  virtue  of  the  laws  of  this  state, 
shall  ever  employ  the  words  "  Lucretia  Mott "  to  designate,  de- 
scribe or  name  any  hospital,  infirmary  or  dispensary,  or  any  part 
thereof,  or  any  similar  institution. 

Amended  by  L.  1911,  chap.  638;  Lu  1912,  chap.  2;  L.  1913,  chap.  24,  and 
L.   1916,  chap.  22.     In  effect  April  17,  1916. 

§  7.    Amended  and  supplemental  certificates. 

If  in  the  original  or  amended  certificate  of  incorporation  of  any 
corporation,  or  if  in  a  supplemental  certificate  of  any  corporation 
any  informality  exist,  or  if  any  such  certificate  contain  any  matter 
not  authorized  by  law  to  be  stated  therein,  or  if  the  proof  or 
acknowledgment  thereof  shall  be  defective,  the  corporators  or  di- 
rectors of  the  corporation  may  make  and  file  an  amended  certificate 
correcting  such  informality  or  defect  or  striking  out  such  unau- 
thorized matter;  and  the  certificate  amended  shall  ber  deemed  to 
be  amended  accordingly  as  of  the  date  such  amended  certificate  was 
filed,  and  upon  the  filing  of  such  an  amended  certificate  of  incor- 
poration, the  corporation  shall  then  for  all  purposes  be  deemed 
to  be  a  corporation  from  the  time  of  filing  the  original  certificate. 

The  supreme  court  may,  upon  due  cause  shown,  and  proof 
made,  and  upon  notice  to  the  attorney-general,  and  to  such  other 
persons  as  the  court  may  direct,  and  upon  such  terms  and  con- 
ditions as  it  may  impose,  amend  any  certificate  of  incorporation 
which  fails  to  ex])ress  the  true  object  and  purpose  of  the  cor- 
poration, so  as  to  truly  set  forth  such  object  and  purpose. 

When  an  amended  or  supplemental  certificate  is  filed,  an  entry 
shall  be  made  upon  the  margin  of  the  index  and  record  of  the 
original  certificate  of  the  date  and  place  of  record  of  every  such 
amended  certificate. 

The  amendment  of  a  certificate  under  this  section  shall  be  with- 
out prejudice  to  any  pending  action  or  proceeding,  or  to  any 
rights  previously  accrued. 

§  8.    Lost  or  destroyed  certificates. 

If  either  of  the  certificates  of  incorporation  ehall  be  lost  or  de- 
stroyed after  filing,  a  certified  copy  of  the  other  certificate  may 
be  filed  in  the  place  of  the  one  so  lost  or  destroyed  and  as  of  the 
date  of  its  original  filing,  and  such  certified  copy  shall  have  the 
same  force  and  effect  as  the  original  certificate  had  when  filed. 


General  Corpoeation  Law.  §  9. 

§  9.  Certificate  and  other  papers  as  evidence;  evidence  of 
consolidation. 

1.  The  certificate  of  incorporation  of  any  corporation  duly 
filed  shall  be  presumptive  evidence  of  its  incorporation,  and  any 
amended  certificate  or  other  paper  duly  filed  or  recorded  relating 
to  the  incorporation  of  any  corporation  or  its  existence  or  manage- 
ment, and  containing  facts  required  or  authorized  by  law  to  be 
stated  therein,  shall  be  presumptive  evidence  of  the  existence  of 
such  facts.  , 

2.  Whenever,  by  the  laws  of  any  other  state  or  territory,  or  the 
dominion  of  Canada,  a  copy  of  the  certificate  of  organization  or 
incorporation  or  any  other  certificate,  "Certified  or  exemplified  by 
any  officer  or  officers  in  such  state  or  territory  or  dominion,  is  or 
shall  be  prima  facie  evidence  of  the  due  formation,  creation, 
existence,  organization  or  capacity  of  any  corporation  or  joint- 
stock  company,  created,  organized  or  located  in  such  state,  terri- 
tory or  dominion,  or  claiming  so  to  be,  such  certificate  or  cer- 
tificates, duly  exemplified,  or  a  duly  exemplified  copy  thereof, 
shall  be  received  in  all  actions  and  proceedings  in  this  state,  in  or 
before  all  courts  and  officers,  with  the  same  force  and  effect  in  all 
respects  as  prima  facie  evidence  as  aforesaid,  as  in  such  other 
state,  territory  or  dominion. 

3.  Where  two  or  more  corporations  have  been  or  shall  here- 
after be  consolidated  and  merged  into  a  new  corporation,  a  cer- 
tificate of  the  secretary  of  state  under  his  official  seal  concisely 
stating  the  names  of  the  respective  corporations  consolidated,  the 
dates  of  the  filing  of  the  certificates  respectively  of  the  incorpora- 
tion of  such  corporations  in  his  office,  the  object  for  which  they 
were  formed,  including  the  nature  and  locality  of  their  business 
as  set  forth  in  their  respective  incorporation  papers  on  file  in  his 
office,  the  date  of  the  filing  of  the  consolidation  agreement  and 
other-  proceedings  in  his  office,  the  name  of  the  new  corporation 
formed  by  such  consolidation  and  merger,  the  term  of  its  corporate 
existence,  the  place  where  its  principal  office  is  situated  and  the 
amount  of  its  capital  stock,  shall  be  presumptive  and  prima  facie 
evidence  in  all  actions  and  special  proceedings  for  all  purposes  of 


§§   10,   11.  General  Corpoeation  Law. 

the  incorporation  of  the  corporations  so  consolidated,  the  incor- 
poration of  the  new  corporation  by  such  consolidation  and  merger 
from  the  date  of  filing  of  said  consolidation  agreement  and  pro- 
(jeedings,  and  of  the  other  facts  so  certified  by  him. 

§  10.    Limitation  of  powers;  provisions  of  certificate. 

1.  No  corporation  shall  possess  or  exercise  any  corporate 
powers  not  given  by  law,  or  not  necessary  to  the  exercise  of  the 
powers  so  given. 

2.  The  certificate  of  incorporation  of  any  corporation  may  eon- 
tain  any  provision  for  the  regulation  of  the  business  and  the  con- 
duct of  the  affairs  of  the  corporation,  and  any  limitation  uj>on  its 
powers,  or  upon  the  powers  of  its  directors  and  stockholders,  which 
does  not  exempt  them  from  the  performance  of  any  obligation  or 
the  performance  of  any  duty  imposed  by  law. 

§  11.    Grant  of  general  powers. 

Every  corporation  as  such  has  power,  though  not  specified  in 
the  law^  under  which  it  is  incorporated: 

1.  To  have  succession  for  the  period  specified  in  its  certificate 
of  incorporation  or  by  la^v,  and  perpetually  when  no  period  is 
specified. 

2.  To  have  a  common  seal,  and  alter  the  same  at  pleasure. 

3.  To  acquire  by  grant,  gift,  purchase,  devise  or  bequest,  to 
hold  and  to  dispose  of  such  property  as  the  purposes  of  the  cor- 
poration shall  require,  subject  to  such  limitations  as  may  be  pre- 
scribed by  law. 

4.  To  apfK)int  such  officers  and  agents  as  its  business  shall 
require,  and  to  fix  their  compensation,  and 

5.  To  make  by-laws,  not  inconsistent  with  any  existing  law, 
for  the  management  of  its  property,  the  regulation  of  its  affairs, 
and  the  transfer  of  its  stock,  if  it  has  any,  and  the  calling  of 
meetings  of  its  members.  Such  by-laws  may  also  fix  the  amount 
of  stock,  which  must  be  represented  at  meetings  of  the  stock- 
holders in  order  to  constitute  a  quorum,  unless  otherwise  pro- 
vided by  law.     By-laAvs  duly  adopted  at  a  meeting  of  the  mem- 


General  Coepokation  Law.     §§  12,   lo,   14. 

bers  of  tlie  oorporations  shsdl  control  the  action  of  its  directors. 
JSIo  by-law  adopted  by  the  board  of  directors  regulating  the  elec- 
tion of  directors  or  officers  shall  be  valid  unless  published  for  at 
least  once  a  week  for  two  successive  weeks  in  a  newspaper  in  the 
county  where  the  election  is  to  be  held,  and  at  least  thirty  days 
before  such  election.  Subdivisions  four  and  five  of  this  section 
shall  not  apply  to  municipal  corporations. 

§  12.  Enlargement  of  limitations  upon  the  amount  of  the 
property  of  non-stock  corporations. 

If  any  general  or  special  law  heretofore  passed,  or  any  certifi- 
cate of  incorporation,  shall  limit  the  amount  of  property  a  corpo- 
ration other  than  a  stock  corporation  may  take  or  hold,  such 
corporation  may  take  and  hold  property  of  the  value  of  ten 
million  dollars  or  less,  or  the  yearly  income  derived  from  which 
shall  be  one  million  dollars  or  less,  notwithstanding  any  such 
limitations.  In  computing  the  value  of  such  property,  no  in- 
crease in  value  arising  otherwise  than  from  improvements  made 
thereon  shall  be  taken  into  account. 

Amended  by  L.  1909,  chap.  276,  and  L.  1911,  chap.  581. 

§  13.    Acquisition  of  additional  real  property. 

When  any  corporation,  except  a  life  insurance  corporation,  shall 
have  sold  or  conveyed  any  part  of  its  real  property,  the  supreme 
court  m^y.  notwithstanding  any  restriction  of  a  general  or  special 
law,  authorize  it  to  purchase  and  hold  from  time  to  time  other  real 
property,  upon  satisfactory  proof  that  the  value  of  the  property  so 
purchased  does  not  exceed  the  value  of  the  property  so  sold  and 
conveyed  within  the  three  years  next  preceding  the  application. 

§  14.    Acquisition  of  property  without  the  state. 

Any  domestic  corporation  transacting  business  in  other  states  or 
foreign  countries  may  acquire  and  dispose  of  such  property  a3 
shall  be  requisite  for  such  corporation  in  the  convenient  trans- 
action of  its  business.  Any  domestic  corporation  establishing  or 
maintaining  a  charitable,  philanthropic  or  educational  institution 
within  this  state  may  also  carry  on  its  work  and  establish  or  main- 


§  15.  General  Cokpobation  Law. 

tain  one  or  more  branches  of  such  institution  or  an  additional 
institution  or  additional  institutions  in  any  other  state,  the  Dis- 
trict of  Columbia  or  in  any  part  of  the  territories  or  dependencies 
of  the  United  States  of  America  or  in  any  foreign  country  and  for 
either  of  said  purposes  may  take  by  devise  or  bequest,  hold,  pur- 
chase, mortgage,  sell  and  convey  or  otherwise  dispose  of  such  real 
and  personal  property  without  this  state  as  may  be  requisite  there- 
for. But  nothing  in  this  section  contained  shall  be  construed  n- 
exempting  from  taxation  property  to  any  additional  amount  than 
is  now  allowed  to  such  corporation  under  existing  laws. 

§  15.    Certificate  of  authority  of  a  foreign  corporation. 

No  foreign  stock  corporation  other  than  a  moneyed  corporation, 
shall  do  business  in  this  state  without  having  first  procured  from 
the  secretary  of  state  a  certificate  that  it  has  complied  with  all 
the  requirements  of  law  to  authorize  it  to  do  business  in  this 
state,  and  that  the  business  of  the  corporation  to  be  carried  on 
in  this  state  is  such  as  may  be  lawfully  carried  on  by  a  corpora- 
tion incorporated  imder  the  laws  of  this  state  for  such  or  similar 
business,  or  if  more  than  one  kind  of  business,  by  two  or  more 
corporations  so  incorporated  for  such  kinds  of  business  respect- 
ively. The  secretary  of  state  shall  deliver  such  certificate  to 
every  such  corporation  so  complying  with  the  requirements  of 
law.  1^0  foreign  stock  corporation  doing  business  in  this  state 
shall  maintain  any  action  in  this  state  upon  any  contract  made 
by  it  in  this  state,  unless  prior  to  the  making  of  such  contract 
it  shall  have  procured  such  certificate.  This  prohibition  shall 
also  apply  to  any  assignee  of  such  foreign  stock  corporation  and 
to  any  person  claiming  under  such  assignee  or  such  foreign 
stock  corporation  or  under  either  of  them.  I^o  certificate  of 
authority  shall  be  granted  to  any  foreign  corporation  having  the 
same  name  as  an  existing  domestic  corporation,  or  a  name  so 
nearly  resembling  it  as  to  be  calculated  to  deceive,  nor  to  any 
foreign  corporation,  other  than  a  moneyed  or  insurance  corpora- 
tion, with  the  word  "  trust,"  "  bank,"  "  banking,"  "  insurance," 
"  assurance,"  "  indemnity,"  "  guarantee,"  "  guaranty,"  "  sav- 
ings," "  investment,"  "  loan  "  or  "  benefit,"  as  a  part  of  its  name. 


General  'Corporation  Law.  §  16. 

§  16.    Proof  to  be  filed  before  granting  certificate. 

Before  granting  such  oertificate  tha  secretary  of  state  shall  re- 
quire every  such  foreign  corporation  to  file  in  his  office  a  sworn 
copy  in  the  English  language  of  its  charter  or  certificate  of  in- 
corporation and  a  statement  under  its  corporate  seal,  and  the  sig- 
nature of  its  president,  vice-president  or  other  acting  head,  particu- 
larly setting  forth  the  business  or  objects  of  the  corporation  which 
it  is  engaged  in  carrying  on  or  which  it  proposes  to  carry  on  within 
the  state,  and  a  place  within  the  state  which  is  to  be  its  principal 
place  of  business,  and  designating  a  person  upon  whom  process 
against  the  corporation  may  be  served  within  the  state.  The  person 
so  designated  must  have  an  office  or  place  of  business  at  the  place 
where  such  corporation  is  to  have  its  principal  place  of  business 
within  the  state  and  such  designation  must  specify  such  office  or 
place  of  business  of  the  said  person  so  designated,  and  if  it  is 
within  a  city  the  street  and  street  number  if  any,  or  other  suitable 
designation  of  the  particular  locality.  Such  designation  shall  be 
accompanied  with  the  written  consent  of  the  person  designated  and 
shall  continue  in  force  until  revoked  by  an  instrument  in  writing 
designating  in  like  manner  some  other  person  upon  whom  process 
against  the  corporation  may  be  served  in  this  state  or  until  the 
filing  in  the  same  office  of  a  written  revocation  of  said  consent 
executed  by  the  person  so  designated.  If  the  person  so  designated 
dies  or  removes  from  the  place  where  the  corporation  has  its  prin- 
cipal place  of  business  within  the  state,  or  files  such  revocation  of 
his  consent,  and  the  corporation  does  not  within  thirty  days  after 
such  death  or  removal  or  revocatioii  of  consent  designate  in  like 
manner  another  person  upon  whom  process  against  it  may  be  served 
within  the  state,  the  secretary  of  state  may  revoke  the  authority  of 
the  corporation  to  do  business  within  the  state,  and  process  against 
the  corporation  in  an  action  upon  any  liability  incurred  within  this 
state  before  such  revocation,  may,  after  such  death  or  removal,  or 
revocation  of  consent,  and  before  another  designation  is  made,  be 
served  upon  the  secretary  of  state.  At  the  time  of  such  service 
the  plaintiff  shall  pay  to  the  secretary  of  state  two  dollars,  to  be 
included  in  his  taxable  costs  and  disbursements,  and  the  secretary 
of  state  shall  forthwith  mail  a  copy  of  such  notice  to  such  corpora- 


§§  17,  18.  General  Corporation  Law. 

tion  if  its  address,  or  the  address  of  any  officer  thereof,  is  known  to 
him.  The  secretary  of  state  may  require  the  execution  of  any 
such  designation,  revocation  or  consent,  to  be  authenticated  as  he 
deems  proper  and  lie  may  refuse  to  file  it  without  such 
authentication. 

§  17.    Reincorporation  of  foreign  moneyed  corporations. 

Any  moneyed  corporation  duly  organized  by  or  under  the  laws 
of  any  state  of  the  United  States,  and  having  an  office  or  doing 
business  in  this  state,  may  file,  if  a  banking  corporation  or 
authorized  to  make  loans  upon  pledges  or  deposits,  in  the  office 
of  the  superintendent  of  banks,  and  if  an  insurance  corporation  in 
the  office  of  the  superintendent  of  insurance,  the  documents  de- 
scribed in  section  eighteen  of  this  chapter,  and  such  documents 
shall  be  recorded  as  original  certificates  of  incorporation  are  re- 
quired by  law  to  be  recorded.  The  fees  for  filing  and  recording 
such  documents,  together  with  the  tax,  if  any,  required  by  law  to 
be  paid  before  the  incorporation  of  a  domestic  company  of  the 
same  class,  must  be  paid  before  filing. 

§  18-    Papers  to  be  filed  upon  reincorporation. 

The  documents  to  be  filed  by  any  such  corporation  shall  include, 

1.  A  copy  of  its  charter,  certificate  of  incorporation,  or  other 
document  constituting  it  a  body  corporate,  with  such  amend- 
ments, if  any,  as  are  desired  by  the  corporation  or  are  required  by 
the  laws  of  ITew  York,  authenticated  as  an  original  certificate  of 
incorporation  is  required  to  be  authenticated ; 

2.  A  declaration  of  its  desire  to  become  a  corporation  of  this 
state  and  of  its  submission  to  the  laws  of  this  state,  duly  executed 
by  the  authority  of  the  body  in  which  its  corporate  powers  are 
vested. 

3.  A  certificate  of  the  superintendent  of  that  department  in 
which  these  papers  are  filed  that  the  charter,  certificate  of  incor- 
poration or  other  constituent  document,  with  its  proposed  amend- 
ments, if  any,  as  filed,  is  in  all  respects  consistent  with  the  laws 
of  this  state  relating  to  domestic  corporations  of  the  same  class; 
that  the  corporation  applicant  has  complied  with  all  oonditiona 


General  Corporation  Law.  §§  19,  20. 

imposed  by  its  laws  upon  domestic  corporations  of  the  same  claafl 
beginning  business  in  this  state,  with  the  exception  of  any  pro- 
visions concerning  the  residence  of  a  majority  of  the  corporators, 
trustees,  or  directors  of  such  corporation ;  that  its  name  is  not  the 
same  with  the  name  of  any  domestic  corporation,  nor  likely  to  be 
confounded  with  any  such  name,  and  that  it  has  paid  all  fees  and 
taxes  due  from  it  to  the  state,  including  the  tax,  if  any,  imposed 
by  this  state  upon  the  original  incorporation  of  a  company  of  the 
same  class. 

§  19.    When  reincorporation  effected  and  effect  thereof. 

From  the  date  of  filing  these  documents  the  corporation  shall 
become  and  be  a  corporation  of  this  state,  and  shall  be  subject 
to  all  the  laws  of  this  state  applicable  to  corporations  of  the  same 
class ;  but  its  existence  and  powers  as  such  corporation  shall  termi- 
nate if  it  shall  fail  at  any  time  for  one  month  to  maintain  an 
ofiice  within  the  state  at  which  an  authorized  officer  or  agent  shall 
be  present  at  all  reasonable  business  hours,  prepared  to  exhibit  the 
books  of  the  company  to  the  proper  authorities  of  this  state  and  to 
receive  service  of  process;  or  if  it  shall  fail  within  two  years  to 
terminate  its  corporate  existence  derived  from  any  other  state,  by 
surrender  of  its  charter  or  by  dissolution. 

§  20.  Acquisition  of  real  property  in  this  state  by  certain 
foreign  corporations. 

Any  foreign  corporation  doing  business  in  this  state  and  created 
under  the  laws  of  the  United  States,  or  of  any  state  or  territory 
thereof,  or  of  any  foreign  state  or  nation  which  borders  the 
United  States  of  America  and  which  by  its  laws  confers  similar 
privileges  on  corporations  created  by  the  laws  of  the  state  of  New 
York,  may  acquire  and  hold  such  real  property  in  this  state  as  may 
be  necessary  for  its  corporate  purposes  in  the  transaction  of  its 
business  in  this  state,  and  convey  the  same  by  deed  or  otherwise  in 
the  same  manner  as  a  domestic  corporation. 

Amended  by  chap.  68  of  1910. 


§§  21,  22,  23.     General  Corporation  Law. 

§  21.  Acquisition  by  foreign  corporation  of  real  property  in 
this  state. 

Any  foreign  corporation  may  pirrcliase  at  a  sale  upon  the  fore- 
closure of  any  mortgage  held  by  it,  or,  upon  any  judgment  or  de- 
cree for  debts  due  it,  or,  upon  any  settlement  to  secure  such  debts, 
any  real  property  within  this  state  covered  by  or  subject  to  such 
mortgage,  judgment,  decree  or  settlement,  and  may  take  by  de- 
vise any  real  property  situated  within  this  state  and  hold  the 
same  for  not  exceeding  five  years  from  the  date  of  such  purchase, 
or  from  the  time  when  the  right  to  the  possession  thereof  vests  in 
such  devisee,  and  convey  it  by  deed  or  otherwise  in  the  same 
maimer  as  a  domestic  corporation. 

§  22.    Prohibition  of  banking  powers. 

N'o  corporation,  domestic  or  foreign,  other  than  a  corporation 
formed  under  or  subject  to  the  banking  laws  of  this  state  or  of 
the  United  States,  except  as  permitted  by  such  laws,  shall  by 
any  implication  or  construction  be  deemed  to  possess  the  power 
of  carrying  on  the  business  of  discounting  bills,  notes  or  other 
evidences  of  debt,  of  receiving  deposits,  of  buying  and  selling 
bills  of  exchange,  or  of  issuing  bills,  notes  or  other  evidences  of 
debt  for  circulation  as  money,  or  of  engaging  in  any  other  form 
of  banking;  nor  shall  any  such  corporation,  except  an  express 
company  having  contracts  with  railroad  companies  for  the  opera- 
tion of  an  express  service  upon  the  lines  of  such  railroad  com- 
panies, or  a  transatlantic  steamship  company,  or  a  telegraph 
company,  or  a  corporation  incorporated  prior  to  the  year  eighteen 
hundred  and  fifty,  to  promote  the  welfare  of  emigrants,  possess 
the  power  of  receiving  money  for  transmission  or  of  transmitting 
the  same,  by  draft,  traveler's  check,  money  order  or  otherwise. 

Amended  by  I>.  1911,  chap.  771. 

§  23.    Qualification  of  members  as  voters. 

Unless  otherwise  provided  in  the  certificate  of  incorporation, 
every  stockholder  of  record  of  a  stock  corporation  shall  be  entitled 
at  every  meeting  of  the  corporation  to  one  vote  for  every  share  of 
stock  standing  in  his  name  on  the  books  of  the  corporation;  and  at 
every  meeting  of  a  non-stock  corporation,  every  member,  unless 
disqualified  by  the  by-laws,  shall  be  entitled  to  one  vote.  The  stock- 
holders of  a  stock  corporation,  by  a  by-law  adopted  by  a  vote  at  any 


General  Coepokation  Law.  §§  24,  25. 

annual  meeting,  or  at  any  special  meeting  duly  called  for  sucli 
purpose,  may  prescribe  a  period,  not  exceeding  forty  days  prior 
tx)  meetings  of  the  stockliolders,  during  which  no  transfer  of  stock 
on  tlie  books  of  the  corporation  may  be  made.  Except  in  cases  of 
express  trust,  or  in  which  other  provision  shall  have  been  made 
by  written  agreement  between  the  parties,  the  record  holder  of 
stock  \A  hich  shall  be  held  by  him  as  security,  or  which  shall  actually 
belong  to  another,  upon  demand  therefor  and  payment  of  neces- 
sary expenses  thereof,  shall  issue  to  such  pledgor  or  to  such  actual 
owner  of  such  stock,  a  proxy  to  vote  thereon.  'No  member  oi 
a  corporation  shall  sell  his  vote  or  issue  a  proxy  to  vote  to  any 
person  for  any  sum  of  money  or  any  thing  of  value.  The  books 
and  papers  containing  the  record  of  membership  of  the  corpora- 
tion shall  be  produced  at  any  meeting  of  its  members  upon  the 
request  of  any  member.  If  the  right  to  vote  at  any  such  meeting 
shall  be  challenged,  the  inspectors  of  election,  or  other  persons 
presiding  thereat,  shall  require  such  books,  if  they  can  be  had,  to 
bo  produced  as  evidence  of  the  right  of  the  person  challenged  to 
vote  at  such  meeting,  and  all  persons  who  may  appear  from  such 
books  to  be  members  of  the  corporation  may  vote  at  such  meeting 
in  person  or  by  proxy,  subject  to  the  provisions  of  this  chapter. 

§  24.    Cumulative  voting. 

The  certificate  of  incorporation  of  any  stock  corporation  may 
provide  that  at  all  elections  of  directors  of  such  corporation,  each 
stockholder  shall  be  entitled  to  as  many  votes  as  shall  equal  the 
number  of  his  shares  of  stock  multiplied  by  the  number  of  directors 
to  be  elected,  and  that  he  may  cast  all  of  such  votes  for  a  single 
director  or  may  distribute  them  among  the  number  to  be  voted  for, 
or  any  two  or  more  of  them  as  he  may  see  fit,  which  right,  when 
exercised,  shall  be  termed  cumulative  voting.  The  stockholders 
of  a  corporation  heretofore  formed,  who,  by  the  provisions  of  laws 
existing  on  April  thirtieth,  eighteen  hundred  and  ninety-one,  were 
entitled  to  the  exercise  of  such  right,  may  hereafter  exercise  such 
right  according  to  the  provision  of  this  section. 

§  25.    Voting  trust  agreements. 

A  stockholder  may,  by  agreement  in  writing,  transfer  his  stock 
to  aay  person  or  persons  for  the  purpose  of  vesting  in  him  or  them 
the  right  to  vote  thereon  for  a  time  not  exceeding  five  years  upon 
terms  and  conditions  stated,  pursuant  to  which  such  person  or 


§§  26,  27.  General  Coepokation  Law. 

persons  shall  act;  every  other  stockholder,  upon  his  request  there- 
for, may,  by  a  like  agreement  in  writing,  also  transfer  his  stock  to 
the  same  person  or  persons  and  thereupon  may  participate  in  the 
terms,  conditions  and  privileges  of  such  agreement;  the  certifi- 
cates of  stock  so  transferred  shall  be  surrendered  and  canceled 
and  certificates  therefor  issued  to  such  transferee  or  transferees 
in  which  it  shall  appear  that  they  are  issued  pursuant  to  such 
ngroement  and  in  the  entry  of  such  transferee  or  transferees  as 
owners  of  such  stock  in  the  proper  books  of  said  corporation  that 
fact  shall  also  be  noted  and  thereupon  he  or  they  may  vote  upon 
the  stock  so  transferred  during  the  time  in  such  agreement  speci- 
fied;  a  duplicate  of  every  such  agreement  shall  be  filed  in  the 
office  of  the  corporation  where  its  principal  business  is  transacted 
and  be  open  to  the  inspection  of  any  stockholder,  daily,  during 
business  hours. 

§  26.    Proxies. 

Every  member  of  a  corporation,  except  a  religious  corporation, 
entitled  to  vote  at  any  meeting  thereof  may  so  vote  by  proxy. 

iSTo  ofEcer,  clerk,  teller  or  bookkeeper  of  a  corporation  formed 
under  or  subject  to  the  banking  law  shall  act  as  proxy  for  any 
stockholder  at  any  meeting  of  any  such  corporation. 

Every  proxy  must  be  executed  in  writing  by  the  member  him- 
self, or  by  his  duly  authorized  attorney.  'No  proxy  hereafter  made 
shall  be  valid  after  the  expiration  of  eleven  months  from  the  date 
y{  its  execution  unless  the  member  executing  it  shall  have  speci- 
fied therein  the  length  of  time  it  is  to  continue  in  force,  which 
shall  be  for  some  liraited  period.  Every  proxy  shall  be  revocable 
at  the  pleasure  of  the  person  executing  it ;  but  a  corporation  having 
no  capital  stock  may  prescribe  in  its  by-laws  the  persons  who  may 
act  as  proxies  for  members,  and  the  length  of  time  for  which 
proxies  may  be  executed. 

§  27.    Challenges. 

Every  member  of  a  corporation  oflFering  to  vote  at  any  election 
or  meeting  of  the  corporation  shall,  if  required  by  an  inspector 
of  election  or  other  officer  presiding  at  such  election  or  meeting, 
or  by  any  other  member  present,  take  and  subscribe  the  following 
oath :  ^'  I  do  solemnly  swear  that  in  voting  at  tliis  election  E  have 
not,  either  directly,  indirectly  or  impliedly  received  any  promise 


Geneeal  Corporation  Law.  §§  28,  29. 

or  any  sum  of  money  or  any  thing  of  value  to  influence  the  giving 
of  my  vote  or  votes  at  this  meeting  or  as  a  consideration  therefor.'' 
Any  person  offering  to  vote  as  proxy  for  any  other  person  shall 
present  his  proxy  and,  if  so  required,  take  and  subscribe  the  fol- 
lowing oath ;  "  I  do  solemnly  swear  that  I  have  not,  either  directly^ 
indirectly  or  impliedly,  given  any  promise  or  any  sum  of  money 
or  any  thing  of  value  to  induce  the  giving  of  a  proxy  to  me  to 
vote  at  this  election,  or  received  any  promise  or  any  sum  of  money 
or  any  thing  of  value  to  influence  the  giving  of  my  vote  at  this 
meeting,  or  as  a  consideration  therefor."  The  inspectors  or  per- 
sons presiding  at  the  election  may  administer  such  oath,  and  all 
such  oaths  and  proxies  shall  be  filed  in  the  office  of  the  corporation. 

§  28.    Effect  of  failure  to  elect  directors. 

If  the  directors  shall  not  be  elected  on  the  day  designated  in  the 
by-laws,  or  by  law,  the  corporation  shall  not  for  that  reason  be  dis- 
solved; but  every  director  shall  continue  to  hold  his  office  and 
discharge  his  duties  until  his  successor  has  been  elected. 

§  29.    Mode  of  calling  special  election  of  directors. 

If  the  election  has  not  been  held  on  the  day  so  designated,  the 
directors  shall  forthwith  call  a  meeting  of  the  members  of  the  cor- 
poration for  the  purpose  of  electing  directors,  of  which  meeting 
notice  shall  be  given  in  the  same  manner  as  of  the  annual  meeting 
for  the  election  of  directors. 

If  such  meeting  shall  not  be  so  called  within  one  month,  or,  if 
held,  shall  result  in  a  failure  to  elect  directors,  any  member  of 
the  corporation  may  call  a  meeting  for  the  purpose  of  electing 
directors  by  publishing  a  notice  of  the  time  and  place  of  holding 
such  meeting  at  least  once  in  each  week  for  two  successive  weeks 
immediately  preceding  the  election,  in  a  newspaper  published  in 
the  county  where  the  election  is  to  be  held  and  in  such  other  man- 
ner as  may  be  prescribed  in  the  by-laws  for  the  publication  of 
notice  of  the  annual  meeting,  and  by  serving  upon  each  member, 
either  personally  or  by  mail,  directed  to  him  at  his  last  known 
post-office  address,  a  copy  of  such  notice  at  least  two  weeks  before 
the  meeting. 


§§  30,  31,  32.     General  Corporation  Law. 

§  30.    Mode  of  conducting  special  election  of  directors. 

Such  meeting  shall  be  held  at  the  office  of  the  corporation,  or  if 
it  has  none,  at  the  place  in  this  state  where  its  principal  business 
has  been  transacted,  or  if  access  to  such  office  or  place  is  denied  or 
can  not  be  had,  at  some  other  place  in  the  city,  village  or  town 
where  such  office  or  place  is  or  was  located. 

At  such  meeting  the  members  attending  shall  constitute  a  quo- 
rum. They  may  elect  inspectors  of  election  and  directors  and 
adopt  by-laws  providing  for  future  annual  meetings  and  election 
of  directors,  if  the  corporation  has  no  such  by-laws,  and  transact 
any  other  business  which  may  be  transacted  at  an  annual  meeting 
of  the  members  of  the  corporation. 

§  31.  Qualification  of  voters  and  canvass  of  votes  at  special 
election. 

In  the  absence  at  such  meeting  of  the  books  of  the  corporation 
showing  who  are  members  thereof,  each  person,  before  voting,  shall 
present  his  sworn  statement  setting  forth  that  he  is  a  member  of 
the  corporation;  and  if  a  stock  corporation,  the  number  of  shares 
of  stock  owned  by  him  and  standing  in  his  name  on  the  books  of 
the  corporation,  and,  if  known  to  him,  the  whole  number  of  shares 
of  stock  of  the  corporation  outstanding.  On  filing  such  statement, 
he  may  vote  as  a  member  of  the  corporation ;  and  if  a  stock  corpo- 
ration, he  may  vote  on  the  shares  of  stock  appearing  in  such  state- 
ment to  be  owned  by  him  and  standing  in  his  name  on  the  books 
of  the  corporation. 

The  inspectors  shall  return  and  file  such  statements,  with  a 
certificate  of  the  result  of  the  election,  verified  by  them,  in  the 
office  of  the  clerk  of  the  county  in  which  such  election  is  held, 
and  the  persons  so  elected  shall  be  the  directors  of  the  corporation. 

§  32.    Powers  of  supreme  court  respecting  elections. 

The  supreme  court  shall,  upon  the  application  of  any  persori 
or  corporation  aggrieved  by  or  complaining  of  any  election  of  any 
corporation  or  any  proceeding,  act  or  matter  touching  the  same, 
upon  notice  thereof  to  the  adverse  party,  or  to  those  to  be  affected 
thereby,  forthwith  and  in  a  summary  way  hear  the  affidavits, 


General  Cobporation  Law.  §§  33,  34. 

proofs  and  allegations  of  the  parties,  or  otherwise  inquire  into 
the  matters  or  causes  of  complaint,  and  establish  the  election  or 
order  a  new  election,  or  make  such  order  and  give  such  relief  as 
right  and  justice  may  require. 

§  33.    Stay  of  proceedings  in  actions  collusively  brought. 

If  an  action  is  brought  against  a  corporation  by  tbe  procure- 
ment or  default  of  its  directors,  or  any  of  them,  to  enforce  any 
claim  or  obligation  declared  void  by  law,  or  to  which  the  cor- 
poration has  a  valid  defense,  and  such  action  is  in  the  interest 
or  for  the  benefit  of  any  director,  and  the  corporation  has  by  his 
connivance  made  default  in  such  action,  or  consented  to  the  valid- 
ity of  such  claim  or  obligation,  any  member  of  the  corporation 
may  apply  to  the  supreme  court,  upon  affidavit,  setting  forth  the 
facts,  for  a  stay  of  proceedings  in  such  action,  and  on  proof  of  the 
facts  in  such  further  manner  and  upon  such  notice  as  the  court 
may  direct,  it  may  stay  such  proceedings  or  set  aside  and  vacate 
the  same,  or  grant  such  other  relief  as  may  seem  proper,  and 
which  will  not  injuriously  affect  an  innocent  party,  who,  without 
notice  of  such  wrongdoing  and  for  a  valuable  consideration,  haa 
acquired  rights  under  such  proceedings. 

§  34.    Quorum  of  directors  and  powers  of  majority. 

The  affairs  of  every  corporation  shall  be  managed  by  its  board 
of  directors,  at  least  one  of  whom  shall  be  a  resident  of  this 
state.  Unless  otherwise  provided  a  majority  of  the  board  of 
directors  of  a  corporation  at  a  meeting  duly  assembled  shall  be 
necessary  to  constitute  a  quorum  for  the  transaction  of  business 
and  the  act  of  a  majority  of  the  directors  present  at  a  meeting 
at  which  a  quorum  is  present  shall  be  the  act  of  the  board  of 
directors.  The  members  of  a  corporation  may  in  by-laws  ^ 
the  number  of  directors  necessary  to  constitute  a  quorum  at  a 
number  less  than  a  majority  of  the  board,  but  at  least  equal  to 
one-third  of  its  number.  Subject  to  the  by-laws,  if  any,  adopted 
by  members  of  a  corporation,  the  directors  may  make  necessary 
by-laws  of  the  corporation. 


§§  35,  36,  37.     General  Cokporation  Law. 

§  35.    Directors  as  trustees  in  case  of  dissolution. 

Upon  the  dissolution  of  any  corporation,  its  directors,  unless 
other  persons  shall  be  appointed  bj  the  legislature,  or  by  some 
court  of  competent  jurisdiction,  shall  be  the  trustees  of  its  cred- 
itors, stockholders  or  members,  and  shall  have  full  power  to  settle 
its  affairs,  collect  and  pay  outstanding  debts,  and  divide  among 
the  persons  entitled  thereto  the  money  and  other  property  remain- 
ing after  payment  of  debts  and  necesssary  expenses. 

Such  trustees  shall  have  authority  to  sue  for  and  recover  the 
debts  and  property  of  the  corporation,  by  their  name  as  such 
trustees,  and  shall  jointly  and  severally  be  personally  liable  to  its 
creditors,  stockholders  or  members,  to  the  extent  of  its  property 
and  effects  that  shall  come  into  their  hands. 

§  36.    Forfeiture  for  non-user. 

If  any  corporation,  except  a  railroad,  turnpike,  plank-road  or 
bridge  corporation,  shall  not  organize  and  commence  the  transac- 
tion of  its  business  or  undertake  the  discharge  of  its  corporate 
duties  within  two  years  from  the  date  of  its  incorporation,  its 
corporate  powders  shall  cease. 

§  37.    Extension  of  corporate  existence. 

Any  domestic  corporation  at  any  time  before  the  expiration 
thereof,  may  extend  the  term  of  its  existence  beyond  the  time 
specified  in  its  original  certificate  of  incorporation,  or  by  law,  or  in 
any  certificate  of  extension  of  corporate  existence,  by  the  consent 
of  the  stockholders  owning  two-thirds  in  amount  of  its  capital 
stock,  or  if  not  a  stock  corporation,  by  the  consent  of  two-thirds  of 
its  members,  which  consent  shall  be  given  either  in  writing  or  by 
vote  at  a  special  meeting  of  the  stockholders  called  for  that  purpose, 
upon  the  same  notice  as  that  required  for  the  annual  meetings  of 
the  corporation ;  and  a  certificate  under  the  seal  of  the  corporation 
that  such  consent  was  given  by  the  stockholders  in  writing,  or  that 
it  was  given  by  vote  at  a  meeting  as  aforesaid,  shall  be  subscribed 
and  acknowledged  by  the  president  or  a  vice-president,  and  by  the 
secretary  or  an  assistant  secretary  of  the  corporation,  and  if  a 
corporation  formed  under  or  subject  to  the  banking  law  shall  be 


General  Corporation  Law.  §  38. 

filed  in  the  office  of  the  superintendent  of  banks,  if  an  insurance 
corporation,  in  the  office  of  the  superintendent  of  insurance,  and 
otherwise  in  the  office  of  the  secretary  of  state,  and  shall  by  such 
officer  be  duly  recorded  and  indexed  in  a  book  specially  provided 
therefor,  and  a  certified  copy  of  such  certificate,  with  a  certificate 
of  such  officer  of  such  filing  and  record,  or  a  duplicate  original 
of  such  certificate,  shall  be  filed  and  similarly  recorded  and  in- 
dexed in  the  office  of  the  clerk  of  the  county  wherein  the  corpora- 
tion has  its  principal  place  of  business,  and  shall  be  noted  in  the 
margin  of  the  record  of  the  original  certificates  of  such  corporation, 
if  any,  in  such  offices,  and  thereafter  the  term  of  the  existence  of 
such  corporation  shall  be  extended  as  designated  in  such  certificate. 

The  certificate  of  incorporation  of  any  corporation  whose  dura- 
tion is  limited  by  such  certificate  or  by  law,  may  require  that  the 
consent  of  the  stockholders  owning  a  greater  percentage  than  two- 
tliirds  of  the  stock,  if  a  stock  corporation,  or  of  more  than  two- 
thirds  of  the  members,  if  a  non-stock  corporation,  shall  be  requisite 
to  effect  an  extension  of  corporate  existence  as  authorized  by  this 
section. 

Amended  by  L.  1913,  ch.  306. 

§  38-    Revival  of  corporate  existence. 

If  the  term  of  existence  of  any  domestic  corporation  shall  have 
expired  and  it  shall  be  made  satisfactorily  to  appear  to  the  supreme 
court  that  such  corporation  was  legally  organized  pursuant  to  any 
law  of  this  state,  and  that  it  shall  have  issued  its  bonds  payable  at  a 
date  beyond  the  date  fixed  in  its  charter  or  certificate  of  incorpora- 
tion for  the  expiration  of  its  corporate  existence,  and  such  bonds 
shall  be  unmatured  and  unpaid,  or,  if  a  bank,  incorporated  under 
a  general  law  of  this  state,  that  shall  have  issued  any  other  obliga- 
tions or  shall  have  incurred  any  other  indebtedness  which  at  the 
date  of  the  application  shall  be  unsatisfied  or  unpaid,  the  supreme 
court  may,  upon  the  application  of  any  person  interested  and 
upon  such  notice  to  such  other  parties  as  the  court  may  require, 
by  order,  authorize  the  filing  and  recording  of  a  certificate  re- 
viving the  existence  of  such  corporation,  upon  such  condition?! 
and  with  such  limitations  as  such  order  shall  specify,  and  ex- 
tending such  corporate  existence  for  a  term  not  exceedirsr  thp 
term  for  which  it  was  originally  incorporated.     Upon  filing  and 


§§  39,  40.  General  Corpoeation  Law. 

recording  such  certificate  in  the  same  manner  as  certificates  of 
extension  of  corporate  existence  duly  issued  before  the  expira- 
tion of  the  existence  of  a  domestic  corporation  are  authorized 
by  law  to  be  filed  and  recorded,  such  corporate  existence  shall 
be  revived  and  extended  in  pursuance  of  the  terms  of  such  order, 
but  such  revival  and  extension  shall  not  affect  any  litigation  com- 
menced after  such  expiration  and  pending  at  the  time  of  such 
revival. 
Amended  by  L.  1911,  chap.  63. 

§  39.  Approval  of  certificates  of  extension  or  revival;  when 
required. 

In  the  case  of  a  corporation  formed  under  or  subject  to  the  bank- 
ing law,  no  certificate  of  extension  or  revival  shall  be  filed  or  re- 
corded unless  it  shall  have  indorsed  thereon  the  written  approval 
of  the  superintendent  of  banks;  or,  if  an  insurance  corporation, 
unless  it  shall  have  indorsed  thereon  the  written  approval  of  the 
superintendent  of  insurance ;  and,  if  a  turnpike  or  bridge  corpora- 
tion, it  shall  not  be  filed  unless  it  shall  have  indorsed  thereon  or 
annexed  thereto  a  certified  copy  of  a  resolution  of  the  board  of 
supervisors  of  each  county  in  which  such  turnpike  or  bridge  is 
located,  approving  of  and  authorizing  such  extension. 

§  40-  Extension  wnen  stock  Is  owned  by  another  cor- 
poration. 

If  all  the  stock  of  a  corporation  other  than  a  corporation 
formed  under  or  subject  to  the  banking  law,  or  an  insurance 
corporation,  or  a  turnpike,  plank-road  or  bridge  corporation  shall 
be  lawfully  owned  by  another  stock  corporation  entitled  by  law  to 
take  a  surrender  and  merger  thereof,  the  corporate  existence  of 
such  corporation  whose  stock  is  so  owned  may  be  extended  at  any 
time  for  the  term  of  the  corporate  existence  of  the  possessor  corpo- 
ration, by  filing  in  the  office  or  offices  in  which  the  original  certifi- 
cate or  certificates  of  incorporation  of  the  first-mentioned  corpora- 
tion were  filed  a  certificate  of  such  extension  executed  by  its 
president  and  secretary  and  by  such  corporation  owning  all  the 
shares  of  its  capital  stock. 


General  Coepobation  Law.     §§  41,  42,  43. 

§  41.    Effect  of  extension. 

Every  corporation  extending  its  corporate  existence  under  this 
chapter  or  under  any  general  law  of  the  state  shall  thereafter  be 
subject  to  the  provisions  of  this  chapter  and  of  such  general  law, 
notwithstanding  any  special  provisions  in  its  charter,  and  shall 
thereafter  be  deemed  to  be  incorporated  under  the  general  laws  of 
the  state  relating  to  the  incorporation  of  a  corporation  for  the 
purpose  of  carrying  on  the  business  in  which  it  is  engaged,  and 
shall  be  subject  to  the  provisions  of  such  law. 

§  42.    When  notice  of  lapse  of  time  unnecessary. 

Whenever  under  the  provisions  of  any  of  the  corporate  laws 
a  corporation  is  authorized  to  take  any  action  after  notice  to  its 
members  or  after  the  lapvse  of  a  prescribed  period  of  time,  such 
action  may  be  taken  without  notice  and  without  the  lapse  of  any 
period  of  time,  if  such  action  be  authorized  or  approved,  and  such 
requirements  be  waived  in  writing  by  every  member  of  such  cor- 
poration, or  by  his  attorney  thereunto  authorized. 

§  43-    As  to  acts  of  directors. 

Whenever,  under  the  provisions  of  any  of  the  corporate  laws,  a 
corporation  is  authorized  to  take  any  action  by  the  agreement  or 
action  of  its  directors,  managers  or  trustees,  such  agreement  or 
action  may  be  taken  by  such  directors,  regularly  convened  as  a 
board,  and  acting  by  a  majority  of  a  quorum,  except  when  other- 
wise^ expressly  required  by  law  or  the  by-laws  of  the  corporation 
and  any  such  agreement  shall  be  executed  in  behalf  of  the  corpora- 
tion by  such  officers  as  shall  be  designated  by  the  board  of  directors, 
managers  or  trustees.  At  any  meeting  at  which  every  member  of 
the  board  of  directors  shall  be  present,  though  held  without  notice, 
any  business  may  be  transacted  which  might  have  been  transacted 
if  the  meeting  had  been  duly  called.  Except  when  otherwise  re- 
quired by  law  or  the  by-laws  of  the  corporation,  special  meeting? 
of  the  members  of  the  corporation  may  be  called  in  the  same  man- 
ner as  the  annual  meeting  thereof. 


§  44.  General  Corpokation  Law. 

§  44.    Political  contributions  prohibited;  penalty. 

No  corporation  or  joint-stock  association  doing  business  in 
this  state,  except  a  corporation  or  association  organized  or  main- 
tained for  political  purposes  only,  shall  directly  or  indirectly  pay 
or  use  or  offer,  consent  or  agree  to  pay  or  use  any  money  or  prop- 
erty for  or  in  aid  of  any  political  party,  committee  or  organization, 
or  for,  or  in  aid  of,  any  corporation,  joint-stock  or  other  associa- 
tion organized  or  maintained  for  political  purposes,  or  for,  or  in 
aid  of,  any  candidate  for  political  office  or  for  nomination  for 
such  office,  or  for  any  political  purpose  whatever,  or  for  the 
reimbursement  or  indemnification  of  any  person  for  moneys  or 
property  so  used.  Any  officer,  director,  stockholder,  attorney  or 
agent  of  any  corporation  or  joint-stock  association  which  violates 
any  of  the  provisions  of  this  section,  who  participates  in,  aids, 
abets  or  advises  or  consents  to  any  such  violation,  and  any  person 
who  solicits  or  knowingly  receives  any  money  or  property  in 
violation  of  this  section,  shall  be  guilty  of  a  misdemeanor  and 
punishable  by  imprisonment  in  a  penitentiary  or  county  jail 
for  not  more  than  one  year  and  a  fine  of  not  more  than  one 
thousand  dollars.  E^o  person  shall  be  excused  from  attending 
and  testifying,  or  producing  any  books,  papers  or  other  docu- 
ments before  any  court  or  magistrate,  upon  any  investigation, 
proceeding  or  trial,  for  a  violation  of  any  of  the  provisions  of 
this  section,  upon  the  ground  or  for  the  reason  that  the  testimony 
or  evidence,  documentary  or  otherwise,  required  of  him  may  tend 
to  convict  him  of  a  crime  or  to  subject  him  to  a  penalty  or  for- 
feiture; but  no  person  shall  be  prosecuted  or  subjected  to  any 
penalty  or  forfeiture  for  oi  on  account  of  any  transaction,  matter 
or  thing  concerning  which  he  may  so  testify  or  produce  evidence, 
documentary  or  otherwise,  and  no  testimony  so  given  or  produced 
shall  be  received  against  him  upon  any  criminal  investigation  oi 
proceeding. 


General  Corporation  Law.  §§  60,  61. 

AKTICLE  3. 

Change  of  Name.  ■ 

8e(jtion  60.  Petition  by  corporation  to  change  name. 

01.  G)ntents  of  petition. 

62.  Notice  of  presentation  of  petition. 

63.  Order  authorizing  change. 

64.  When  change  to  take  effect. 

65.  Substitution  of  new  name  in  pending  action  or  proceeding. 

§  60.    Petition  by  corporation  to  change  name. 

A  petition  to  assume  another  corporate  name  may  be  made  by  a 
domestic  corporation,  whether  incorporated  by  a  general  or  special 
law,  to  the  supreme  court  at  a  special  term  thereof,  held  in  the 
judicial  district  in  which  its  principal  business  office  shall  be 
situated,  or,  if  it  be  other  than  a  stock  corporation,  at  a  special 
term  held  in  the  judicial  district  in  which  its  certificate  of  incor- 
poration is  filed  or  recorded,  or  in  which  its  principal  property  is 
situated,  or  in  which  its  principal  operations  are  or  theretofore 
have  been  conducted.  If  it  be  a  banking,  insurance  or  railroad 
corporation,  the  petition  must  be  authorized  by  a  resolution  of  the 
directors  of  the  corporation,  and  approved  if  a  banking  corpora- 
tion, by  the  superintendent  of  banks ;  if  an  insurance  corporation 
by  the  superintendent  of  insurance,  and  if  a  railroad  corporation, 
by  the  public  service  commission.  The  petition  to  change  the  name 
of  any  other  corporation  must  have  annexed  thereto  a  certificate 
of  the  secretary  of  state,  that  the  name  which  such  corporation 
proposes  to  assume  is  not  the  name  of  any  other  domestic  cor- 
poration or  a  name  which  he  deems  so  nearly  resembling  it,  as  to 
be  calculated  to  deceive. 

Amended  by  chap.  296  of  1910. 

§  61.    Contents  of  petition. 

The  petition  must  be  in  writing,  signed  by  the  petitioner  and 
verified  in  like  nianner  as  a  pleading  in  a  court  of  record,  and 
must  specify  the  grounds  of  the  application,  its  present  name,  and 
the  name  it  proposes  to  assume,  which  must  not  be  the  name  of 
any  otlier  corporation,  or  a  name  so  nearly  resembling  it  as  to  be 


§  62.  General  Corpokation  Law. 

calculated  to  deceive;  and  if  it  be  a  railroad  corporation,  a  corpo- 
ration having  banking  po\\^rs  or  the  power  to  make  loans  upon 
pledges  or  deposits,  or  to  make  insura^-.ces,  that  the  petition  has 
been  duly  authorized  by  a  resolution  of  the  directors  of  the  corpo- 
ration and  approved  by  the  proper  officer. 

§  62.    Notice  of  presentation  of  petition. 

If  the  petition  be  made  by  a  corporation  located  elsewhere  than 
in  the  city  and  county  of  New  York,  notice  of  the  presentation 
thereof  shall  be  published  once  in  each  week  for  three  successive 
weeks  in  a  newspaper  of  every  county  in  which  such  corporation 
shall  have  a  business  office,  or  if  it  has  no  business  office,  of  the 
county  in  which  its  principal  corporate  property  is  situated,  or  in 
which  its  operations  are  or  theretofore  have  been  principally  con- 
ducted, which  newspaper,  if  it  be  a  banking  corporation,  shall  be 
designated  by  the  superintendent  of  banks,  if  an  insurance  corpora- 
tion, by  the  superintendent  of  insurance,  or  of  a  railroad  cor- 
poration, by  the  public  service  commission.  In  the  city  and 
county  of  New  York  such  notice  shall  be  published  once  in  each 
week  for  three  successive  weeks  in  two  daily  newspapers  published 
in  such  county.  If  the  petition  be  made  by  a  domestic  corpora- 
tion organized  under  or  subject  to  the  religious  or  membership 
corporations  law  the  court  may  dispense  with  the  publication  of 
the  notice  of  the  presentation  of  such  petition  or  require  notice 
of  such  presentation  to  be  given  to  such  person  and  in  such  man- 
ner as  the  court  thinks  proper. 

A  copy  of  the  petition  and  notice  of  motion  shall  be  filed  with 
the  secretary  of  state,  and  the  proposed  name  shall  thereupon  be 
reserved  for  snid  corporation  until  three  weeks  after  the  date  of 
such  motion,  and  until  three  weeks  after  the  date  of  any  adjourn- 
ment of  such  motion  if  notice  of  such  adjournment  shall  be  filed 
with  the  secretary  of  state,  and  no  certificate  of  incorporation  of 
a  proposed  corporation,  having  the  same  name  as  the  name  pro- 
posed in  such  petition,  or  a  name  so  nearly  resembling  it  as  to  be 
calculated  to  deceive,  shall  be  filed  in  any  office  for  the  purpose  of 
effecting  its  incorporation,  and  no  corporation  formed  without  the 
state  of  [N'ew  York  having  the  same  name  or  a  name  so  nearly 
resembling  it  as  to  be  calculated  to  deceive  shall  be  given  authority 
to  do  business  in  this  state. 

Amended  by  chap.  296  of  1910. 


General  Corporation  Law.  §§  63,  64. 

§  63.    Order  authorizing  change. 

If  the  court  to  which  the  petition  is  presented  is  satisfied  thereby, 
v>r  bj  the  affidavit  and  certificate  presented  therewith,  that  the  peti- 
tion is  true,  and  that  there  is  no  reasonable  objection  to  the  change 
of  name  proposed  and  that  the  petition  has  been  duly  authorized 
and  that  notice  of  the  presentation  of  the  petition,  if  required  by 
law,  has  been  made,  the  court  shall  make  an  order  authorizing  the 
petitioner  to  assume  the  name  proposed  on  a  day  specified  therein, 
not  less  than  thirty  days  after  the  entry  of  the  order.     The  order 
shall  be  directed  to  be  entered  and  the  papers  on  which  it  was 
granted  to  be  filed  within  ten  days  thereafter  in  the  office  of  the 
clerk  of  the  county  in  which  its  certificate  of  incorporation,  if  any, 
shall  be  filed,  or  if  there  be  none  filed,  in  which  its  principal  office 
shall  be  located,  or  if  it  has  no  business  office  in  the  coimty  in  which 
its  principal  property  is  situated,  or  in  which  its  operations  are  or 
theretofore  have  been  principally  conducted,  or  in  the  office  of  the 
clerk  ot  the  county  in  which  the  special  term  grafting  the  order  is 
held;  and  that  a  certified  copy  of  such  order  shall,  within  ten 
days  after  the  entry  thereof,  be  filed  in  the  office  of  the  secretary 
of  state;  and  also,  if  it  be  a  banking  corporation,  in  the  office  of 
the  superintendent  of  banks,  or  if  it  be  an  insurance  corporation, 
in  the  office  of  the  superintendent  of  insurance,  or  if  it  be  a  rail- 
road corporation,  in  the  offices  of  the  public  service  commissions. 
Such  order  shall  also  direct  the  publication,  within  ten  days  after 
the  entry  thereof  of  a  copy  thereof,  in  a  designated  newspaper,  in 
the  county  in  which  the  order  is  directed  to  be  entered,  once  in 
each  week  for  four  successive  weeks.     The  court  may  dispense 
with  the  publication  of  a  copy  of  such  order  and  require  notice 
to  be  given  to  such  persons  and  in  such  manner  as  it  thinks  proper 
if  the  petition  be  made  by  a  domestic  corporation  organized  under 
or  subject  to  the  religious  or  membership  corporations  law^ 
Amended  by  chap.  2d6  of  1910. 

§  64.    When  change  to  take  effect. 

If  the  order  shall  be  fully  complied  \vith,  and  within  forty  days 
after  the  making  of  the  order,  an  affidavit  of  the  publication  thereof 
shall  be  filed  and  recorded  in  the  office  in  which  the  order  is  en- 


§  65.  General  Corporation  Law. 

tered,  and  in  each  office  in  which  certified  copies  thereof  are  re- 
quired to  be  filed,  if  any,  the  petitioner  shall,  on  and  after  the 
day  specified  for  that  purpose  in  the  order,  be  known  by  the  name 
which  is  thereby  authorized  to  be  assumed,  and  by  i;io  other  name- 
No  proceedings  had  prior  to  April  fourth,  eighteen  hundred  and 
ninety-four,  under  sections  two  thousand  four  hundred  and  four- 
teen and  two  thousand  four  hundred  and  fifteen  of  the  code  of  civil 
procedure  for  the  change  of  the  name  of  a  corporation,  shall  be 
invalid  by  reason  of  the  non-filing  of  an  affidavit  of  the  publication 
of  the  order  changing  such  name  within  twenty  days  from  the  date 
thereof. 

And  no  proceedings  heretofore  had  under  the  provisions  of 
article  three,  chapter  twenty-three,  consolidated  laws,  for  the 
change  of  the  name  of  a  corporation,  shall  be  invalid  by  reason  of 
the  non-filing  and  recording  of  such  affidavit  of  the  publication  of 
the  order  changing  such  name  within  forty  days  from  the  making 
of  such  order. 

Amended  by  L.  1913,  chap.  721.    In  effect  May  24,  1913. 

§  65.  Substitution  of  new  name  in  pending  action  or  pro- 
ceeding. 

An  action  or  special  proceeding,  civil  or  criminal,  commenced  by 
or  against  a  corporation  whose  name  is  so  changed  shall  not  abate, 
nor  shall  any  relief,  recovery  or  other  proceeding  therein  be  pre- 
vented, impeded  or  impaired  in  consequence  of  such  change  of 
name.  The  plaintiff  in  the  action  or  the  party  instituting  the 
special  proceeding,  or  the  people,  as  the  case  requires,  may  at  any 
time,  obtain  an  order  amondiuG:  any  of  the  papers  or  proceedings 
therein,  by  the  substitution  of  the  new  name,  without  costs  and 
\'  Ilhout  prejudice  to  tlio  action  or  proceeding. 


General  Corporation  Law^  §§  70,  71. 

AKTICLE  4. 

Sale  of  Corporate  Real  Property.        ,  ' 

Section  70.  Application  of  this   article. 

71.  Petition. 

72.  Hearing  on  application. 

73.  Order  to  sell,  mortgage  or  lease. 

74.  Insolvent  corporation. 

75.  Service  of  notices. 

76.  Practice  in  cases  not  herein  provided  for. 

§  70.    Application  of  this  article. 

Whenever  any  corporation  is  required  by  law  to  make  applica- 
tion to  the  court  for  leave  to  mortgage,  lea^e  or  sell  its  real  estate, 
the  proceeding  therefor  shall  be  had  pursuant  to  the  provisions  of 
this  article. 

§  71.    Petition. 

The  proceeding  shall  be  instituted  by  the  presentation  to  the 
supreme  court  of  the  district  or  the  county  court  of  the  county 
where  the  real  property,  or  some  part  of  it,  is  situated,  by  the 
corporation  applicant,  of  a  petition  setting  forth  the  following 
facts: 

1.  The  name  of  the  corporation  and  of  its  directors,  trustees  or 
managers,  and  of  its  principal  officers,  and  their  places  of 
residence. 

2.  The  business  of  the  corporation  or  the  object  or  purpose  of 
its  incorporation  and  a  reference  to  the  statute  under  which  it  was 
incorporated. 

3.  A  description  of  the  real  property  to  be  sold,  mortgaged  or 
leased,  by  metes  and  bounds,  with  reasonable  certainty. 

4.  That  the  interests  of  the  corporation  will  be  promoted  by  the 
sale,  mortgage  or  lease,  of  the  real  property  specified,  and  a  con- 
cise statement  of  the  reasons  therefor. 

5.  That  such  sale,  mortgage  or  lease  has  been  authorized,  by  a 
vote  of  at  least  two-thirds  of  the  directors,  trustees  or  managers 
of  the  corporation  at  a  meeting  thereof,  duly  called  and  held,  and 
a  copy  of  the  resolution  granting  such  authority. 


§§  72,  73.  General  Corporation  Law. 

6.  The  market  value  of  the  remaining  real  property  of  the  cor- 
poration a'nd  the  cash  value  of  its  personal  assets,  and  the  total 
amount  of  its  debts  and  liabilities,  and  how  secured,  if  at  all. 

7.  The  application  proposed  to  be  made  of  the  moneys  realized 
from  such  sale,  mortgage  or  lease. 

8.  Where  the  consent  of  the  shareholders,  stockholders  or  mem- 
bers of  the  corporation  is  required  by  law  to  be  first  obtained,  a 
statement  that  such  consent  has  been  given,  and  a  copy  of  the  con- 
sent, or  a  certified  transcript  of  the  record  of  the  meeting  at  which 
it  was  given,  shall  be  annexed  to  the  petition. 

9.  A  demand  for  leave  to  mortgage,  lease  or  sell  the  real  estate 
described. 

The  petition  shall  be  verified  in  the  same  manner  as  a  verified 
pleading  in  an  action  in  a  court  of  record. 

§  72.    Hearing  on  application. 

Upon  presentation  of  the  petition,  the  court  may  immediately 
proceed  to  hear  the  application,  or  it  may,  in  its  discretion,  direct 
that  notice  of  the  application  shall  be  given  to  any  person  inter- 
ested therein,  as  a  member,  stockholder,  officer  or  creditor  of  the 
corporation  or  otherwise,  in  which  case  the  application  shall  be 
heard  at  the  time  and  place  specified  in  such  notice,  and  the  court 
may  in  any  case  appoint  a  referee  to  take  the  proofs  and  report 
the  same  to  tlie  court,  with  his  opinion  thereon.  Any  person,  whose 
interests  may  be  affected  by  the  proceeding,  may  appear  upon  the 
hearing  and  show^  cause  why  the  application  should  not  be  granted. 

§  73.    Order  to  sell,  mortgage  or  lease. 

Upon  the  hearing  of  the  application,  if  it  shall  appear,  to  the 
satisfaction  of  the  court,  that  the  interests  of  the  corporation  wull 
be  promoted  thereby,  an  order  may  be  granted  authorizing  it  to 
sell,  mortgage  or  lease  the  real  property  described  in  the  petition, 
or  any  part  thereof,  for  such  sum,  and  upon  such  terms  as  the  court 
may  prescribe,  and  directing  what  disposition  shall  be  made  of  the 
proceeds  of  such  sale,  mortgage  or  lease. 


General  Cokpokation  Law.     §§  Y4,  75,  76,  90. 

§  74.    Insolvent  corporation. 

If  the  corporation  is  insolvent,  or  its  property  and  assets  are 
insufficient  to  fully  liquidate  its  debts  and  liabilities,  the  applica- 
tion shall  not  be  granted,  unless  all  the  creditors  of  the  corporation 
have  been  served  with  a  notice  of  the  time  and  place  at  which  the 
application  will  be  heard. 

§  75.    Service  of  notices. 

Service  of  notices,  provided  for  in  this  article,  may  be  made 
either  personally  or,  in  case  of  absence,  by  leaving  the  same  at  the 
place  of  residence  of  the  person  to  be  served,  with  some  person  of 
mature  age  and  discretion,  at  least  eight  days  before  the  hearing 
of  the  application,  or  by  mailing  the  same,  duly  enveloped  and 
addressed  and  postage  paid,  at  least  sixteen  days  before  such 
hearing. 

§  76.    Practice  in  cases  not  herein  provided  for. 

In  all  applications  made  under  this  article,  where  the  mode  or 
manner  of  conducting  any  or  all  of  the  proceedings  thereon  is  not 
expressly  provided  for,  the  court  before  whom  such  application 
may  be  pending,  shall  have  the  power  to  make  all  the  necessary 
orders  and  give  the  proper  directions  to  carry  into  effect  the  object 
and  intent  of  this  article,  or  of  any  act  authorizing  the  sale  of  cor- 
porate real  property,  and  the  practice  in  such  cases  shall  conform, 
as  near  as  may  be,  to  the  ordinary  practice  in  such  court 

ARTICLE  5. 

Judicial  Supervision  of  Corporation  and  of  the  Officers 
and  Members  Thereof. 

JSkction  90.    Action   against  officers   of  corporation   for   misconduct. 

91.  Who  may   bring   such  an   action. 

91-a.  Actions  against  officers  by  corporation,  or  receiver  or  trustee. 

92.  Visitatorial  power  over  corporation  not  affected  by  this  article. 

!i  90.    Action  against  officers  of  corporation  for  misconduct. 

An  action  may  be  maintained  against  one  or  more  trustees, 
directors,  managers,  or  other  officers  of  a  corporation,  to  procure 


§  90.  General  Coepokation  Law. 

a  judgment  for  the  following  purposes,  or  so  much  thereof  as  the 
case  requires: 

1.  Compelling  the  defendants  to  account  for  their  official  con- 
duct, including  any  neglect  of  or  failure  to  perform  their  duties, 
in  the  management  and  disposition  of  the  funds  and  property, 
committed  to  their  charge. 

2.  Compelling  them  to  pay  to  the  corporation,  which  they  rep- 
resent, or  to  its  creditors,  any  money,  and  the  value  of  any  prop- 
erty, which  they  have  acquired  to  themselves,  or  transferred  to 
others,  or  lost,  or  wasted,  by  or  through  any  neglect  of  or  failure 
to  perform  or  by  other  violation  of  their  duties. 

3.  Suspending  a  defendant  from  exercising  his  office,  where  it 
appears  that  he  has  abused  his  trust. 

4.  Removing  a  defendant  from  his  office,  upon  proof  or  con- 
nction  of  misconduct,  and  directing  a  new  election  to  be  held  by 
the  body  or  board  duly  authorized  to  hold  the  same,  in  order  to 
supply  the  vacancy  created  by  the  removal;  or,  where  there  is  no 
such  body  or  board,  or  where  all  the  members  thereof  are  removed, 
directing  the  removal  to  be  reported  to  the  governor,  who  may, 
with  the  advice  and  consent  of  the  senate,  fill  the  vacancies. 

6.  Setting  aside  an  alienation  of  property,  made  by  one  or 
more  trustees,  directors,  managers  or  other  officers  of  a  corporation, 
contrary  to  a  provision  of  law,  or  for  a  purpose  foreign  to  the 
lawful  business  and  objects  of  the  corporation,  where  the  alienee 
knew  the  purpose  of  the  alienation. 

6.  Restraining  and  preventing  such  an  alienation,  where  it  is 
threatened,  or  where  there  is  good  reason  to  apprehend  that  it  will 
be  made. 

7.  The  court  must,  upon  the  application  of  either  party,  make 
an  order  directing  the  trial  by  a  jury  of  the  issue  of  neglect  or 
failure  of  defendants  to  perform  their  duties;  and  for  that  pur- 
pose the  questions  to  be  tried  must  be  prepared  and  settled  as  pre- 
scribed in  section  nine  hundred  and  seventy  of  the  code  of  civil 
procedure. 

As  to  any  litigation  pending  prior  to  September  one,  nineteen 
hundred  and  seven,  the  provisions  of  this  section  as  they  exiated 
prior  to  that  date  shall  apply. 


General  Corporation  Law.    §§  91,  91-a,  92. 

§91.    Who  may  bring  such  an  action. 

An  action  may  be  brought,  as  prescribed  in  the  last  section,  by 
the  attorney-general  in  behalf  of  the  people  of  the  state,  or,  except 
where  the  action  is  brought  for  the  purpose  specified  in  subdivision 
third  or  fourth  of  that  section,  by  a  creditor  of  the  corporation,  or 
by  a  trustee,  director,  manager,  or  other  officer  of  the  corporation, 
having  a  general  superintendence  of  its  concerns. 

§  91a.  Actions  against  officers  by  corporation,  or  receiver 
or  trustee. 

The  supreme  court  shall  also  have  and  exercise  jurisdic- 
tion in  equity,  at  the  suit  of  a  corporation,  or  of  a  receiver,  or 
trustee  in  bankruptcy  thereof,  to  compel  one  or  more  trustees, 
directors,  managers  or  other  officers  of  the  corporation  to  account 
for  injury  to  or  losses  of  the  funds,  assets  or  property  of  the  cor- 
poration, caused  by  or  through  any  neglect  or  failure  of  the  de- 
fendants to  perform,  or  for  violation  of,  their  duties.  The  court 
must,  upon  the  application  of  either  party,  make  an  order  direct- 
ing the  trial  by  jury  of  the  issue  of  negligence,  and  for  that  pur- 
pose the  questions  to  be  tried  must  be  prepared  and  settled  as 
prescribed  in  section  nine  hundred  and  seventy  of  the  code  of 
civil  procedure. 

Added  by  L.  1913,  chap.  633. 

§  92.  Visitatorial  power  over  corporation  not  affected  by 
this  article. 

This  article  does  not  divest  or  impair  any  visitatorial  power  over 
a  corporation,  which  is  vested  by  statute  in  a  corporate  body,  or  a 
public  officer. 


§§   100,  101.         General  Corporation  Law. 

AKTICLE  6. 

Action  for  S±:questbation,  Action  for  Dissolution  and  Ac- 
tion TO  Enforce  Individual  Liability  of  Officer  and 
Member  of  Corporation. 

Section  100.  Action  by  judgment  creditor  for  sequestration. 

101.  Action  to  dissolve  a  corporation. 

102.  Who  may  bring  action  to  dissolve  a  corporation. 

103.  Temporary  injunction  in  action  authorized  by  this  article. 

104.  Temporary  receiver. 

105.  Additional  powers  and  duties  of  temporary  receiver. 

106.  Permanent  receiver. 

107.  Additional  duties  and  liabilities  of  permanent  receiver. 

108.  Application  for  appointment  of  receiver. 

109.  Officers  and  stockholders  may  be  made  parties  in  action  brought 

by  creditor. 

110.  Separate  action  may  be  brought  against  officers  and   stock- 

holders. 

111.  Proceedings  in  such  actions. 

112.  Distribution  of  property  of  corporation  by  judgment  in  actions 

under  this  article. 

113.  Recovery  of  stock  subscriptions. 

114.  Liability  of  directors  and  stockholders. 

115.  Effect  of  this  article. 

116.  Entry  of  judgment  and  filing  copies  thereof. 

§  100.    Action  by  judgment  creditor  for  sequestration. 

Where  final  judgment  for  a  sum  of  money  has  been  rendered 
against  a  corporation  created  by  or  under  the  laws  of  the  state, 
and  an  execution  issued  thereupon  to  the  sheriff  of  the  county, 
where  the  corporation  transacts  its  general  business,  or  where  its 
principal  office  is  located,  has  been  returned  wholly  or  partly  un- 
satisfied, the  judgment  creditor  may  maintain  an  action  to  procure 
a  judgment  sequestrating  the  property  of  the  corporation,  and 
providing  for  a  distribution  thereof,  as  prescribed  in  section  one 
hundred  and  twelve  of  this  chapter. 

§  101.    Action  to  dissolve  a  corporation. 

In  either  of  the  following  cases,  an  action  to  procure  a  judgment, 
dissolving  a  corporation,  created  by  or  under  the  laws  of  the  state, 


General  Corporation  Law.         §§   102,  103. 

and  forfeiting  its  corporate  rights,  privileges  and  franchises,  may 
be  maintained,  as  prescribed  in  the  next  section : 

1.  Where  the  corporation  has  remained  insolvent  for  at  least 
one  year. 

2.  Where  it  has  neglected  or  refused,  for  at  least  one  year,  to 
pay  and  discharge  its  notes  or  other  evidences  of  debt 

8.  AVliere  it  has  suspended  its  ordinary  and  lawful  business  for 
at  least  one  year. 

4.  If  it  has  baulking  powers,  or  power  to  make  loans  on  pledges 
or  deposits,  or  to  make  insurances,  where  it  becomes  insolvent  or 
unable  to  pay  its  debts,  or  has  violated  any  provision  of  the  act, 
by  or  under  which  it  was  incorporated,  or  of  any  other  act  binding 
upon  it 

§  102.    Who  may  bring  action  to  dissolve  a  corporation. 

An  action  specified  in  the  last  section,  may  be  maintained  by  the 
attorney-general,  in  the  name  and  in  behalf  of  the  people.  And 
whenever  a  creditor  or  stockliolder  of  any  corporation  submits  to 
the  attorney-general  a  written  statement  of  facts,  verified  by  oath, 
showing  grounds  for  an  action  under  the  provisions  of  the  last 
section,  and  the  attorney-general  omits,  for  sixty  days  after  this 
submission,  to  commence  an  action  specified  in  the  last  section, 
then,  and  not  otherwise,  such  creditor  or  stockholder  may  apply 
to  the  proper  court  for  leave  to  commence  such  an  action,  and  on 
obtaining  leave  may  maintain  the  same  accordingly ;  and  if  there 
be  no  person  in  existence  upon  whom  service  of  the  summons  can 
be  made  under  the  provisions  of  section  four  hundred  and  thirty- 
one  of  the  cpde  of  civil  procedure,  service  of  the  summons  in  such 
action  may  be  made  in  such  manner  as  the  court  upon  application 
by  petition  may  direct. 

Amended  by  L.  1912,  chap.  204. 

§  103.  Temporary  injunction  in  action  authorized  by  this 
article. 

In  an  action,  brought  as  prescribed  in  this  article,  the  court 
may,  upon  proof  of  the  facts  authorizing  the  action  to  be  main- 


§§   104,  105.        General  Coepokation  Law. 

tallied,  grant  an  injunction  order,  restraining  the  corporation,  and 
its  trustees,  directors,  managers  and  other  officers,  from  collecting 
or  receiving  any  debt  or  demand,  and  from  paying  out,  or  in  any 
way  transferring  or  delivering,  to  any  person,  any  money,  property, 
or  effects  of  the  corporation,  during  the  pendency  of  the  action; 
except  by  express  j>ermission  of  the  court.  Where  the  action  is 
brought  to  procure  the  dissolution  of  the  corporation,  the  injunction 
may  also  restrain  the  corporation,  and  its  trustees,  directors,  man- 
agers and  other  officers,  from  exercising  any  of  its  corporate  rights, 
privileges,  or  franchises,  during  the  pendency  of  the  action;  except 
by  express  permission  of  the  court.  The  provisions  of  title  second 
of  chapter  seventh  of  the  code  of  civil  procedure,  relating  to  the 
granting,  vacating  or  modifying  of  an  injunction  order,  apply  to 
an  injunction  order,  granted  as  prescribed  in  this  section;  except 
that  it  can  be  granted  only  by  the  court. 

§  104-    Temporary  receiver. 

In  such  an  action,  the  court  may  also,  at  any  stage  thereof,  ap- 
point one  or  more  receivers  of  the  property  of  the  corporation. 
A  receiver,  so  appointed,  before  final  judgment  is  a  temporary 
receiver,  until  final  judgment  is  entered.  A  temporary  receiver 
has  power  to  collect  and  receive  the  debts,  demands,  and  other 
property  of  the  corporation;  to  preserve  the  property,  and  the 
proceeds  of  the  debts  and  demands  collected ;  to  sell  or  otherwise 
dispose  of  the  property  as  directed  by  the  court ;  to  collect,  receive 
and  preserve  the  proceeds  thereof;  and  to  maintain  any  action  or 
special  proceeding,  for  either  of  those  purposes.  He  must  qualify 
as  prescribed  by  law  for  the  qualification  of  a  permanent  receiver. 
Unless  additional  powers  are  specially  conferred  upon  him,  as 
prescribed  in  the  next  section,  a  temporary  receiver  has  only  the 
powers  specified  in  this  section,  and  those  which  are  incidental  to 
the  exercise  thereof. 

§  105.    Additional  powers  and  duties  of  temporary  receiver. 

A  temporary  receiver,  appointed  as  prescribed  in  the  last  section, 
is,  in  all  respects,  subject  to  the  control  of  the  court.     In  addition 


Geneeal  Coepokation  Law.        §§  106,  107. 

to  the  powers  conferred  upon  him,  by  the  provisions  of  the  last 
section,  the  court  may,  by  the  order  or  interlocutory  judgment 
appointing  him,  or  by  an  order  subsequently  made  in  the  action, 
or  by  the  final  judgment,  confer  upon  bim  the  powers  and  author- 
ity, and  subject  him  to  the  duties  and  liabilities,  of  a  permanent 
receiver,  or  so  much  thereof  as  it  thinks  proper;  except  that  he 
shall  not  make  any  distribution  among  the  creditors  or  stockholders, 
before  final  judgment,  unless  he  is  specially  directed  so  to  do  by 
the  court. 

§  1 06.    Permanent  receiver. 

A  receiver  appointed  by  or  pursuant  to  a  final  judgment  in  the 
action,  or  a  temporary  receiver  who  is  continued  by  the  final  judg- 
ment, is  a  permanent  receiver,  and  has  all  the  powers  and  authority 
conferred,  and  is  subject  to  all  the  duties  and  liabilities  imposed 
upon  a  receiver  in  article  eleven  of  this  chapter. 

Am»d  by  L.  1909,  ch.  240. 

§  107.  Additional  duties  and  liabilities  of  permanent 
receiver. 

A  permanent  receiver  shall  keep  an  account  of  all  moneys  re- 
ceived by  him,  and  on  the  first  days  of  January,  April,  July  and 
October,  in  each  and  every  year  make  and  file  a  written  statement, 
verified  by  his  oath  that  such  statement  is  correct  and  true,  show- 
ing the  amount  of  money  received  by  such  receiver,  his  agents  or 
attorneys,  the  amount  he  has  a  right  to  retain  and  the  items  for 
which  he  claims  to  retain  the  same,  and  the  distributive  share  due 
each  person  interested  therein.  He  shall  pay  such  distributive 
share  to  the  person  or  persons  entitled  thereto,  on  demand,  at  any 
time  after  such  statement.  Such  account,  statement,  and  all  the 
books  and  papers  of  the  corporation  in  the  hands  of  such  receiver, 
shall  at  all  reasonable  times  be  open  for  the  inspection  of  all  per- 
sons having  an  interest  therein.  And  in  case  of  neglect  or  refusal 
to  comply  with  either  of  the  above  requirements,  or  any  duty  im- 
posed upon  him,  the  supreme  court,  at  either  an  appellate  division 


§§  108,  109,  110.    Geneeal  Cokpokation  Law. 

or  special  term,  shall,  on  the  application  of  the  party  aggrieved, 
unless  such  neglect  or  refusal  shall  be  satisfactorily  explained  to 
the  court,  forthwith  remove  such  receiver,  and  appoint  some  suit- 
able person  as  receiver  in  his  place.  Such  removal  shall  not  vitiate 
or  annul  any  legal  proceedings  had  by  such  receiver;  but  such 
proceedings  shall  be  continued  by  such  successor  as  if  no  removal 
had  been  made.  Such  receiver  shall  also  be  liable  to  pay  to  the 
party  interested,  interest  at  the  rate  of  ten  per  centum  per  annum 
on  all  moneys  due  to  such  party  and  retained  by  him  more  than 
one  day  after  such  demand  made  as  aforesaid. 

§  108.    Application  for  appointment  of  receiver. 

Applications  made  by  the  attorney-general  for  the  appointment 
of  a  receiver  of  a  corporation  shall  be  made  in  the  judicial  district 
in  which  the  action  in  which  the  appointment  is  sought  is  triable. 

§  109.  Officers  and  stockholders  may  be  made  parties  in 
action  brought  by  creditor. 

Whew  the  action  is  brought  by  a  creditor  of  a  corporation,  and 
the  stockholders,  directors,  trustees,  or  other  officers,  or  any  of 
them,  are  made  liable  by  law,  in  any  event  or  contingency,  for  the 
payment  of  his  debt,  the  persons,  so  made  liable,  may  be  made 
parties  defendant,  by  the  original  or  by  a  supplemental  complaint ; 
and  their  liability  may  be  declared  and  enforced  by  the  judgment 
in  the  action. 

§  110.  Separate  action  may  be  brought  against  officers 
and  stockholders. 

Where  the  stockholders,  directors,  trustees,  or  other  officers  of  a 
corporation,  who  are  made  liable,  in  any  event  or  contingency,  for 
the  payment  of  a  debt,  are  not  made  parties  defendant,  as  pre- 
scribed in  the  last  section,  the  plaintiff  in  the  action  may  maintain 
a  separate  action  against  them,  to  procure  a  judgment,  declaring, 
apportioning  and  enforcing  their  liability. 


General  Coepoeation  Law.  §§  111-114. 

§111.    Proceedings  in  such  actions. 

In  an  action  brought  as  prescribed  in  either  of  the  last  two  sec- 
tions, the  court  must,  when  it  is  necessary,  cause  an  account  to  be 
taken  of  the  property  and  of  the  debts  of  the  corporation,  and 
thereupon  the  defendant's  liability  must  be  apportioned  accord* 
ingly;  but,  if  it  affirmatively  appears,  that  the  corporation  is  in- 
solvent, and  has  no  property  to  satisfy  its  creditors,  the  court  may, 
without  taking  such  an  account,  ascertain  and  determiuv^  the 
amount  of  each  defendant's  liability,  aixd  enforce  the  same 
accordingly. 

§  112.  Distribution  of  property  of  corporation  by  judgment 
in  actions  under  this  article. 

A  final  judgment  in  an  action,  brought  against  a  corporation,  as 
prescribed  in  this  article,  either  separately  or  in  conjunction  with 
its  stockholders,  directors,  trustees,  or  other  officers,  must  provide 
for  a  just  and  fair  distribution  of  the  property  of  the  corporation, 
and  of  the  proceeds  thereof,  among  its  fair  and  honest  creditors,  in 
the  order  and  in  the  proportions  prescribed  by  law,  in  case  of  the 
voluntary  dissolution  of  a  corporation. 

§113.    Recovery  of  stock  subscriptions. 

Where  the  stocldiolders  of  the  corporation  are  parties  to  the 
action,  if  the  property  of  tlie  corporation  is  not  sufficient  to  dis- 
charge its  debts,  tlie  interlocutory  or  final  judgment,  as  the  case 
requires,  must  adjudge  that  each  stockholder  pay  into  court  the 
amount  due  and  remaining  unpaid,  on  the  shares  of  stock  held  by 
him,  or  so  much  thereof  as  is  necessary  to  satisfy  the  debts  of  the 
corporation. 

§  114.    Liability  of  directors  and  stockholders. 

If  it  appears,  that  the  property  of  the  corporation,  and  the  sums 
collected  or  *collectable  from  the  stockholders,  upon  their  stock 
subscriptions,  are  or  will  be  insufficient  to  pay  the  debts  of  the  cor- 
poration, the  court  must  ascertain  the  several  sums,  for  which  the 
*So  in  original 


§§   115,  110.  Genekal  Cokpokation  Law. 

Hi  rectors,  trustees,  or  other  officers,  or  the  stockholders  of  the  cor- 
poration, being  parties  to  the  action,  are  liable;  and  must  adjudge 
that  the  same  be  paid  into  court,  to  be  applied,  in  such  proportions 
and  in  such  order  as  justice  requires,  to  the  payment  of  the  debts 
of  the  corporation. 

§  115.    Effect  of  this  article. 

This  article  does  not  repeal  or  affect  anj  special  provision  of  law, 
prescribing  that  a  particular  kind  of  corporation  shall  cease  to 
exist,  or  shall  be  dissolved,  in  a  case  or  in  a  manner,  not  prescribed 
in  this  article;  or  any  special  provision  of  law,  prescribing  the 
mode  of  enforcing  the  liability  of  the  stockholders  of  a  particular 
kind  of  corporation. 

§  116.    Entry  of  judgment  and  filing  certified  copies  thereof. 

The  final  judgment  in  an  action  brought  as  prescribed'  in  this 
article  shall  be  entered'  in  the  office  of  the  clerk  of  the  county  in 
which  the  principal  business  office,  or  the  principal  place  of 
business  of  the  corporation  is  located,  and  if  it  is  adjudged  that 
such  corporation  be  dissolved,  a  certified  copy  of  such  judgment 
shall,  if  a  banking  corporation,  be  filed  in  the  office  of  the  superin- 
tendent of  banks ;  if  an  insurance  corporation,  in  the  office  of  the 
superintendent  of  insurance;  and  if  a  business,  transportation, 
railroad  or  membership  coi'poration,  in  the  office  of  the  secretary 
of  state. 

Added  by  L.  1916,  chap.  163.     In  effect  April  7,  1916. 


General  Corporation  Law.  §§  130,  131. 

AETICLE  7. 
Action  to  Annul  a  Corporation. 

Skctioh  130.    Action  by  attorney-general  to  annul  corporation  when  legisla- 
ture directs. 

131.  Action  by  attorney -general  to  annul  corporation  by  leave  of 

court. 

132.  Notice  of  application  for  leave  to  commence  action  to  amiul 

corporation. 

133.  Jury  trial. 

134.  Injunction  and  receiver  in  final  judgment. 

135.  Temporary  injunction. 

136.  Filing  and  publishing  judgment. 

§  130-  Action  by  attorney-general  to  annul  corporation 
when  legislature  directs. 

The  attorney-general,  whenever  he  is  so  directed  by  the  legisla- 
ture, must  bring  an  action  against  a  corporation  created  by  or  un- 
der the  laws  of  the  state,  to  procure  a  judgment,  vacating  or  an- 
nulling the  act  of  incorporation,  or  any  act  renewing  the  corpora- 
tion, or  continuing  its  corporate  existence,  upon  the  ground  that 
the  act  was  procured  upon  a  fraudulent  suggestion,  or  the  conceal- 
ment of  a  material  fact,  made  by  or  with  the  knowledge  and  consent 
of  any  of  the  persons  incorporated. 

§  131.  Action  by  attorney-general  to  annul  corporation  by 
leave  of  court. 

Upon  leave  being  granted,  as  prescribed  in  the  next  section,  the 
attorney-general  may  bring  an  action  against  a  corporation  created 
by  or  under  the  laws  of  the  state,  to  procure  a  judgment,  vacating 
the  charter  or  annulling  the  existence  of  the  corporation,  upon  the 
ground  that  it  has,  either 

1.  Offended  against  any  provision  of  an  act,  by  or  under  which 
it  was  created,  altered  or  renewed,  or  an  aot  amending  the  same, 
and  applicable  to  the  corporation ;  or, 

2.  Violated  any  provision  of  law,  whereby  it  has  forfeited  ita 
charter,  or  become  liable  to  be  dissolved,  by  the  abuse  of  its 
powers;  or, 


General  Cokpokation  Law. 

3.  Forfeited  its  privileges  or  francliises,  by  a  failure  to  exer- 
cise its  powers;  or, 

4.  Done  or  omitted  any  act,  which  amounts  to  a  surrender  of 
its  corporate  rights,  privileges,  and  franchises;  or, 

6.  Exercised  a  privilege  or  franchise,  not  conferred  upon  it  by 
law. 

§  132.  Notice  of  application  for  leave  to  commence  action 
to  annul  corporation. 

Before  granting  leave,  the  court  may,  in  its  discretion,  require 
such  previous  notice  of  the  application  as  it  thinks  proper,  to  be 
gi\  en  to  the  corporation,  or  any  officer  thereof,  and  may  hear  the 
corporation  in  opposition  thereto. 

§  133.    Jury  trial. 

A.n  action,  brought  as  prescribed  in  this  article,  is  triable,  of 
course  and  of  right,  by  a  jury,  as  if  it  was  an  action  specified  in 
section  nine  hundred  and  sixty-eight  of  the  code  of  civil  procedure 
and  without  procuring  an  order,  as  prescribed  in  section  nine  hun- 
dred and  seventy  of  the  code  of  civil  procedure. 

§  134.    Injunction  and  receiver  in  final  judgment. 

Where  any  of  the  matters,  specified  in  section  one  hundred  and 
thirty  or  section  one  hundred  and  thirty-one  of  this  article,  are 
established  in  an  action,  brought  as  prescribed  in  either  of  those 
sections,  the  court  may  render  final  judgment  that  the  corporation, 
and  each  officer  thereof,  be  perpetually  enjoined  from  exercising 
any  of  its  corporate  rights,  privileges,  and  franchises;  and  that 
it  be  dissolved.  The  judgment  must  also  provide  for  the  appoint- 
ment of  a  receiver,  the  taking  of  an  account,  and  the  distribution 
of  the  property  of  the  corporation,  among  its  creditors  and  stock- 
holders, as  where  a  corporation  is  dissolved  upon  its  voluntary 
application,  as  prescribed  in  article  nine  of  this  chapter. 

§  135.    Temporary  injunction. 

In  an  action,  brought  as  prescribed  in  this  article,  an  injunction 
order  may  be  granted,  at  any  stage  of  the  action,  restraining  the 


General  Cokpokation  Law.  §  13(3. 

corporation,  and  any  or  all  of  its  directors,  trustees  and  otdier 
officers,  from  exercising  any  of  its  corporate  rights,  privileges,  or 
franchises;  or  from  exercising  certain  of  its  corporate  rights, 
privileges,  or  franchises,  specified  in  the  injunction  order;  or  from 
exercising  any  franchise,  liberty,  or  privilege,  or  transacting  any 
business,  not  allowed  by  law.  Such  an  injunction  is  deemed  one 
of  those  specified  in  section  six  hundred  and  three  of  the  code 
of  civil  procedure,  and  all  the  provisions  of  title  second  of  chapter 
seventh  of  the  code  of  civil  procedure  applicable  to  an  injunction 
specified  in  that  section,  apply  to  an  injunction  granted  as  pre- 
scribed in  this  section,  except  that  it  can  be  granted  only  by  the 
court. 

§  136.    Filing  and  publishing  judgment. 

Where  final  judgment  is  rendered  against  a  corporation,  in  an 
action,  brought  as  prescribed  in  this  article,  the  attorney-general 
must  cause  a  copy  of  the  judgment-roll  to  be  forthwith  filed  in  the 
office  of  the  secretary  of  state ;  who  must  cause  a  notice  of  the  sub- 
stance and  effect  of  the  judgment,  to  be  published,  for  four  weeks, 
in  a  newspaper  printed  in  the  county,  wherein  the  principal  place 
of  business  of  the  corporation  was  located. 


§§   150,  151.         General  Corporation  Law. 

ARTICLE  8. 

Action  to  Dissolve  Moneyed  Corporation. 

Section  150.    Temporary  injunction  and  receiver  in  action  against  moneyed 
corporation. 

151.  Order  to  show  cause  why  injunction  apd  receiver  should  not 

be  permanent. 

152.  Inventory  and  appraisal  by  receiver. 

153.  Conversion   of  assets  into  cash  by  receiver. 

154.  Employment  of  counsel  by  receiver. 

155.  Notice  to  creditors  by  receiver. 

156.  Allowance,  rejection  and  adjustment  of  claims  by  receiver. 

157.  Final  settlement  and  distribution  by  receiver. 

158.  Notice  of  account  and  accounting  by  receiver. 
160.  Proceedings  upon  accounting. 

160.  Claims  barred  after  distribution  of  assets  by  receiver. 

161.  Application  of  article. 

§  150.  Temporary  injunction  and  receiver  in  action  against 
moneyed  corporation. 

Whenever  the  attorney-general  shall  commenoe  an  action  against 
a  moneyed  corporation  upon  the  information  of  either  the  superin- 
tendent of  insurance,  or  the  superintendent  of  banks,  for  the  dis- 
solution or  sequestration  of  the  property  or  annulment  of  the  char- 
ter 0"^  a  corporation  formed  under  or  subject  to  the  banking  or 
insurance  law,  and  shall  be  satisfied  that  it  is  unsafe  and  inexpedi- 
ent for  such  corporation  to  continue  doing  business,  the  supreme 
oourt  may,  on  his  application,  in  a  case  provided  by  law,  appoint  a 
receiver  thereof,  and  may  on  such  appointment  grant  an  injunction 
restraining  such  corporation  from  carrying  on  its  business  until 
the  further  order  of  the  court.  The  court  may,  in  its  discretion, 
dispense  with  notice  of  the  application^ 

§  151.  Order  to  show  cause  why  injunction  and  receiver 
should  not  be  permanent. 

The  court,  on  granting  an  order  without  notice,  either  for  the 
appointment  of  a  receiver  or  for  an  injuuiotian,  or  for  both  forms  of 
relief,  as  herein  provided,  shall  make  an  order  that  the  corporation 
so  proceeded  against  show  cause  at  a  term  of  the  court  to  be  held 
not  more   than   tbirty   days   thereafter,   why   such   receiver   and 


General  Coepokation  Law.  §  152. 

injunction  should  not  be  permanent.  Such  order  shall  be  served 
not  less  than  eight  days  before  the  date  upon  which  the  hearing 
thereon  is  to  be  had.  Unless  the  court  otherwise  directs,  the 
receiver  appointed  in  the  first  instance  shall  be  permanent  re- 
ceiver of  such  corporation,  and  the  injunction  shall  be  continued 
during  the  pendency  of  the  litigation.  Such  receiver  shall,  unless 
otherwise  ordered  by  the  court,  continue  to  act  as  such  up  to  and 
after  final  judgment,  and  until  the  affairs  of  the  corporation  shall 
be  finally  settled  and  its  property  distributed  by  him  according 
to  law.  The  bond  to  be  given  by  the  receiver  on  his  appointment 
shall  be  fixed  at  such  sum  and  so  conditioned  that  it  shall  con- 
tinue in  force  and  effect  until  the  final  discharge  of  such  receiver, 
including  any  liability  which  may  be  incurred  by  said  receiver 
by  virtue  of  his  appointment  as  such  in  the  final  judgment,  in 
case  he  shall  be  so  named  therein. 

§  152.    Inventory  and  appraisal  by  receiver. 

It  shall  be  the  duty  of  the  receiver  to  take  an  inventory  and  make 
an  appraisal  of  the  assets  and  property  of  the  corporation.  In 
case  the  corporation  is  subject  to  the  banking  law,  two  disinterested 
appraisers  shall  be  appointed  by  the  superintendent  of  banks  to 
aid  in  this  duty,  and  in  case  the  corporation  is  subject  to  the 
insurance  law,  such  appraisers  shall  be  appointed  by  the  superin- 
tendent of  insurance.  Ten  days'  notice  of  such  inventory  and 
appraisal  shall  be  given  to  the  corporation  and  such  inventory  and 
appraisal  shall  be  completed  and  filed  with  the  clerk  of  the  su- 
preme court  in  the  county  in  which  the  trial  is  to  be  had,  within 
ninety  days  after  the  appointment  of  such  receiver,  and  a  certified 
copy  thereof  in  the  office  of  the  attorney-general,  and  in  the  office 
of  the  superintendent  of  banks,  or  in  the  office  of  the  superin- 
tendent of  insurance,  as  the  case  may  be,  unless  for  good  cause 
shown  the  officer  appointing  such  appraisers  shall,  in  writing, 
extend  the  time  for  the  completion  thereof.  Such  appraisers  shall 
receive  as  compensation  a  reasonable  sum,  not  exceeding  fifteen 
dollars  per  day  and  actual  and  necessary  expenses,  to  be  paid  by 
the  receiver  upon  the  approval  of  the  officer  by  whom  they  were 
named.     The  receiver  shall  be  chargeable  with  the  amount  of  such 


§§  153,  154,  155.     General  Corporation  Law. 

inventory  and  shall  be. relieved  therefrom  to  the  same  extent  and 
upon  the  same  grounds  as  in  the  like  case  of  an  executor. 

§  153.    Conversion  of  assets  into  cash  by  receiver- 

The  receiver  shall  proceed,  immediately  upon  his  appointment, 
to  convert  the  assets  of  the  corporation  into  cash. 

§  154.    Employment  of  counsel  by  receiver. 

It  shall  not  be  lawful  for  any  receiver  to  pay  to  any  attorney  or 
counsel  any  costs,  fees  or  allowance  until  the  amount  thereof  shall 
have  been  stated  to  the  special  t^erm,  as  expenses  incurred  by  sndi 
receiver  and  shall  have  been  approved  by  that  conrt  by  an  order 
duly  entered.  Any  such  order  shall  be  the  subject  of  review  by 
the  appellate  division  and  the  court  of  appeals  on  appeal  thereto 
taken  by  any  party.  The  receiver  may  employ  not  to  exceed  one 
counsel  unless  the  employment  of  additional  counsel  shall  be 
autiiorized  by  the  supreme  court  after  notice  to  the  attorney-general 
of  an  application  therefor. 

§  155.    Notice  to  creditors  by  receiver. 

1.  Within  thirty  days  after  a  receiver  qualifies  he  shall  cause 
to  be  published  once  a  week  for  twelve  weeks  in  a  newspaper  pub- 
lished at  the  principal  place  of  business  of  the  corporation,  a  notice 
to  all  creditors  of  the  corporation  to  present  their  claims  to  such 
receiver  at  his  place  of  business  within  fifteen  days  after  the 
last  publication  of  such  order.  He  shall  also  mail  a  copy  of  such 
notice  to  all  the  creditors  of  the  corporation  known  to  him  or  as 
shown  on  the  books  of  the  company,  at  their  last  known  place  of 
residenca 

2.  The  receiver  of  any  title  guaranty  company  heretofore 
or  hereafter  appointed,  which  company  is  authorized  by  law 
to  issue  policies  of  insurance  or  agreements  of  indemnity  or  guar- 
anty, and  which  corporation  has  issued  and  outstanding  at  the 
time  of  the  appointment  of  the  receiver,  policies  of  insurance 
or  agreements  of  indemnity  or  guaranty,  exceeding  two  thousand 
in  number,  shall  not  be  required  to  mail  to  the  holders  or  owners 
of  said  policies  of  insurance  or  of  said  agreements,  the  notice 


General  Corporation  Law.  §  156. 

required  by  law  to  be  given  to  creditors  of  an  insolvent  moneyed 
corporation ;  but  such  receiver  sball  cause  a  notice  to  be  published 
twice  a  week,  for  four  successive  weeks,  in  two  newspapers  pub- 
lished in  the  county  where  said  corporation  has  its  principal  place 
of  business ;  which  said  notice  shall  require  all  creditors  and  owners 
und  lioldors  of  outstanding  policies  of  insurance  or  agreements  of 
indemnity  or  guaranty,  to  exhibit  and  prove  their  claim,  within 
sixty  days;  and,  in  default  of  so  doing,  shall  be  precluded  froin 
all  benefit  of  the  judgment  and  from  any  and  all  distributiou 
which  may  be  made  thereunder,  except  that  the  creditor  or  holder 
or  owner  of  any  policy  or  agreement  of  indemnity  or  guaranty, 
who  shall  exhibit  or  prove  his  claim,  with  an  affidavit  that  he  had 
no  notice  or  knowledge  thereof,  in  time  to  comply  with  the  pro- 
visions hereof,  at  any  time  before  an  order  is  made  directing  a 
final  settlement  and  distribution  of  assets  of  such  corporation, 
shall  be  entitled  to  have  his  claim  received,  and  shall  have  the  same 
rights  and  benefits  thereon,  so  far  as  the  assets  of  such  corporation 
then  remaining  undistributed  may  be  applied,  as  if  his  claim  had 
been  exhibited  and  proved  within  the  time  limited  by  such  notice. 
This  subdivision  shall  apply  to  receivers  of  moneyed  corporations. 
Am'd  by  L.  1909,  ch.  240. 

§  156.  Allowance,  rejection  and  adjustment  of  claims  by 
receiver. 

The  receiver  shall  have  the  same  power  and  authority  with  ref- 
erence to  the  allowance  or  rejection  of  claims  as  is  given  to  execu- 
tors, and  no  reference  shall  be  had  to  pass  upon  claims  except  such 
as  may  be  disputed  by  such  receiver.  In  case  any  claim  shall 
be  disputed,  the  receiver  shall  immediately  upon  the  expiration 
of  the  time  for  the  presentation  of  claims,  upon  notice  to  the  par- 
ties whose  claims  have  been  rejected,  apply  to  the  court  for  the 
appointment  of  a  referee  to  hear  and  determine  as  to  the  allowance 
thereof.  Claims  allowed  by  the  receiver  shall  be  subject  to  objec- 
tion upon  the  final  settlement  and  their  validity  may  be  determined 
as  the  validity  of  claims  against  estates  are  determined  upon  final 
settlement  by  a  surrogate. 


§§  157,  158.        General  Corporation  Law. 

§  157.    Final  settlement  and  distribution  by  receiver. 

The  receiver  may  apply  for  a  final  settlement  of  his  accounts 
and  an  order  for  distribution  at  any  time  after  the  expiration 
of  six  months,  and  shall  so  apply  within  eighteen  months  after 
qualifying  as  such.  The  attorney-general  or  any  creditor,  or  party 
interested,  may  apply  for  an  order  that  the  receiver  show  cause 
why  an  accounting  and  distribution  should  not  be  had  at  any  time 
after  the  expiration  of  one  year  after  the  receiver  qualifies;  and 
it  shall  be  the  duty  of  the  attorney-general,  after  the  expiration  of 
eigliteen  months  from  tlie  time  the  receiver  enters  upon  his  duties, 
in  case  he  has  not  applied  for  a  final  settlement  of  his  accounts,  to 
apply  for  such  an  order  on  notice  to  such  receiver.  In  case  of 
such  application  by  a  party  other  than  the  receiver,  the  court  shall 
direct  the  receiver  to  take  steps  to  account  with  all  convenient 
speed.  The  receiver  is  not  required  or  authorized  to  file  any 
account,  except  as  herein  provided,  except  by  special  order  of  the 
court. 

§  158.    Notice  of  account  and  accounting  by  receiver. 

1.  The  receiver  shall  file  his  account,  together  with  a  statement 
of  the  items  and  amounts  claimed  by  his  counsel,  up  to  that  date 
with  the  court  and  a  duplicate  thereof,  together  with  the  vouchers, 
with  the  attorney-general,  at  least  thirty  days  before  the  time  fixed 
for  his  final  settlement  and  accounting,  and  the  attorney-general 
shall  serve  upon  the  attorney  for  the  receiver  any  objections  he 
may  have  to  the  account,  or  to  the  staitement  as  to  the  items  and 
amounts  claimed  by  counsel  for  compensation,  appearing  in  such 
account  on  or  before  such  hearing:.  The  receiver  shall  also  within 
ten  days  after  the  filing  of  the  account,  mail  to  each  creditor  of 
the  corporation  a  notice  of  the  time  and  place  of  the  filing  of  his 
account,  and  a  notice  of  the  time  and  place  of  the  presentation 
of  the  account  to  the  court.  Unless  objection  is  made  to  the 
items  of  the  account  by  a  creditor  or  on  behalf  of  the  attorney- 
general,  no  referee  shall  be  appointed  to  pass  thereon,  but  the  same 
shall  be  examined  and  settled  by  tlie  court.  In  case  objection  is 
made  p  referee  may  be  appointed  to  take  the  testimony  and  report 
the  same  to  the  court 


General  Corporation  Law.  §  159. 

2.  Prior  to  the  final  settlement  of  a/icounts  of  a  receiver  of 
any  moneyed  corporation,  having  in  force,  at  the  time  of  his 
appointment,  outstanding  policies  of  insurance  or  agreements  of 
indemnity  or  guaranty,  exceeding  two  thousand  in  number,  said 
receiver  shall  give  notice  to  all  of  the  creditors  and  to  the  owners 
or  holders  of  said  policies  of  insurance  or  agreements  of  indemnity 
or  guaranty,  issued  or  entered  into  by  such  insolvent  corporation, 
by  publication  of  a  notice  published  at  least  twice  a  week,  for 
three  successive  weeks,  immediately  preceding  the  making  of  an 
application  fox*  a  final  settlement  of  his  accounts  and  for  an  order 
for  the  distribution  of  the  assets  in  his  hands.  Said  notice  shall 
state  the  fact  that  an  application  for  a  final  settlement  of  his  ax;- 
oounts  and  for  an  order  for  the  distribution  of  the  assets  in  hand 
will  be  made,  and  shall  also  state  the  time  and  place,  when  and 
where  the  application  will  be  made.  Upon  the  hearing  of  such 
application  and  motion,  the  court  shall,  unless  objection  is  made 
to  the  items  of  the  account  by  a  creditor  or  by  a  bolder  or  owner 
of  a  policy  of  insurance  or  agreement  of  indemnity  or  guaranty, 
or  on  behalf  of  the  attorney-general,  examine  and  settle  the  said 
accounts,  and  make  an  order  for  the  settlement,  adjustment  and 
distribution  of  the  assets  in  tke  hands  of  the  receiver.  Where 
objection  is  made  to  the  items  of  account,  the  court  may  refer  the 
same  to  a  referee  to  examine  and  pass  thereon.  This  subdivision 
shall  apply  to  receivers  of  all  moneyed  corporations  heretofore  or 
hereafter  appointed. 
Am'd  by  L.  1909,  ch.  240. 

§  159.    Proceedings  upon  accounting. 

Upon  any  accounting  by  the  receiver,  after  the  expiration  of  the 
time  for  creditors  to  present  claims,  the  court  shall  direct  the 
receiver  to  immediately  convert  the  entire  assets  of  the  corporation 
in  his  hands  into  cash,  in  case  any  of  the  assets  Lave  not  been  so 
converted,  unless  good  and  sufficient  cause  to  the  contrary  shall 
appear  to  the  satisfaction  of  the  court,  such  as  to  authorize  an  order 
granting  the  receiver  additional  time  for  that  purpose,  and  upon 
any  such  accounting  the  court  slinU  direct  the  receiver  to  distribute 
the  assets  of  the  corporation  in  iiis  hands  to  the  persons  entitled 


§§  160,  161.        General  Corporation  Law. 

thereto,  except  so  much  thereof  as  may  be  necessary  to  be  retained 
for  the  purpose  of  administering  the  trust  and  making  payment 
upon  contested  claims,  and  upon  such  claims  as  may  thereafter  be 
presented  and  entitled  to  be  paid.  Whenever  the  attorney-general 
shall  apply  for  an  order  to  show  cause  why  an  accounting  should 
not  be  had  by  a  receiver  by  reason  of  his  failure  to  so  account 
within  twelve  months  after  his  appointment,  and  shall  deem  it  ad- 
visable to  designate  counsel  to  act  on  his  behalf,  the  court  may, 
upon  the  accounting,  make  a  reasonable  allowance  by  way  o^ 
counsel  fee  to  counsel  so  designated. 

§  160.    Claims    barrftd    after   distribution    of   assets    by 
receiver. 

Upon  the  granting  of  the  application  and  the  making  of  the 
order  of  distribution,  as  provided  in  subdivision  two  of  section  one 
hundred  and  fifty-eight  of  this  article,  and  the  distribution  of  the 
assets  in  the  hands  of  the  receiver,  in  the  manner  directed  by  the 
order  of  the  court,,  all  claims  of  the  creditors  or  of  holders  or 
owmers  of  policies  of  insurance  or  agreements  of  indemnity  or 
guaranty,  against  such  receiver,  shall  be  barred.  This  section  shall 
apply  to  receivers  of  all  moneyed  corporations. 
Am'i  by  L.  1909,  ch.  240. 

§  161.    Application  of  article. 

Except  as  provided  in  sections  one  hundred  and  fifty-five,  one 
hundred  and  fifty-eight,  subdivision  two,  and  one  hundred  and 
sixty  of  this  article,  this  article  shall  apply  to  a^^  actions  for  the 
ap]^ointment  of  receivers  of  moneyed  corporations  brought  by  tJie 
attorney-general,  and  to  all  receivers  of  such  corporations  hereto- 
fore or  hereafter  appointed,  and  to  the  settlement  and  adjustment 
of  their  accounts  and  distribution  of  assets  in  their  hands,  and  all 
proceedings  with  reference  thereto  hereafter  to  be  taken,  and  shall 
supersede  and  repeal  all  provisions  of  law  inconsistent  herewitli, 
so  far  as  the  same  relate  to  actions  for  the  sequestration,  annul- 
ment or  dissolution  of  moneyed  corporations.  As  to  all  other 
corporations  and  as  to  matters  not  affected  by  this  article,  pro- 
visions of  law  heretofore  existing  shall  remain  in  full  force  and 
effect. 


General  Corporation  Law.  §  170. 


AKTICLE  9. 

Proceedings   for   Voluntary  Dissolution   of   Corporation. 

Section  170.  Petition  for  voluntary  dissolution  of  corporation. 

171.  Directors  or  trustees  may  be  required  to  petition. 

172.  Petition  when  directors  or  trustees  do  not  agree. 

173.  Corporations  excepted  from  two  preceding  sections. 

174.  Contents  of  petition. 

175.  Affidavit  to  be  annexed  to  petition. 

176.  Presentation  of  petition. 

177.  Corporations  without  stockholders. 

178.  Action  by  court  upon  petition  for  dissolution. 

179.  Publication  of   order   to   ahow   cause  why  corporation   should 

not  be  dissolved. 

180.  Service  of  order  to  show  cause. 

181.  Entering  and  filing  order  and  papers. 

182.  Temporary  receiver. 

183.  Application  for  appointment  of  receiver. 

184.  Injunction. 

185.  Referee. 

186.  Hearing. 

187.  Decision. 

188.  Use  of  original  papers  on  hearing. 

189.  Amending  papers. 

190.  Final  orders. 

191.  Pemmnent  receiver. 

192.  Appointment   of  director,   trustee    or  other   officer   or   stock- 

holder as  receiver. 

193.  Certain  sales,  transfers  and  judgments  void. 

194.  Omission,  defect  or  default  of  receiver. 

195.  Exception  of  certain  corporations. 

§  170.    Petition  for  voluntary  dissolution  of  corporation. 

If  a  majority  of  the  directors,  trustees,  or  other  officers,  having 
the  managemeiit  of  the  concerns  of  a  corporation  created  by  or 
under  the  laws  of  the  state,  discover  that  the  stock,  effects,  and 
other  property  thereof  are  not  sufficient  to  pay  all  just  demands, 
for  which  it  is  liable,  or  to  afford  a  reasonable  security  to  those 
who  may  deal  with  it ;  or  if,  for  any  reason,  they  deem  it  beneficial 
to  the  interests  of  the  stockholders  that  the  corporation  should  be 
dissolved,  they  may  present  a  petition  to  the  supreme  court  praying 
for  a  final  order  dissolving  the  corporation,  as  prescribed  in  this 
article. 


§§  171-174.        General  Corporation  Law. 

§171.    Directors  or  trustees  may  be  required  to  petition. 

It  shall  be  the  duty  of  a  majority  of  the  directors  or  trustees  of 
every  corporation  created  by  or  under  the  laws  of  this  state  to  pre- 
sent a  petition  as  prescribed  in  the  last  section  whenever  directed 
so  to  do  by  a  majority  in  interest  of  its  stockholders. 

§  172.    Petition  when  directors  or  trustees  do  not  agree. 

If  a  corporation,  created  under  a  general  statute  of  the  state  for 
the  formation  of  corporations  or  under  any  special  act  or  charter 
has  an  even  number  of  trustees  or  directors  who  are  equally 
divided  respecting  the  management  of  its  affairs,  or  if  the  stock  of 
such  corporation  is  equally  divided  into  not  more  than  two  inde- 
pendent ownerships  or  interests,  or  if  the  entire  stock  of  the  cor- 
poration is,  at  that  time,  owned  by  the  trustees  or  directors  who 
are  even  in  number  or  equally  divided  representing  the  manage- 
ment of  its  affairs,  or  if  the  stock  is  so  divided,  that  one-half 
thereof  is  owned  or  controlled  by  persons  favoring  the  course  of 
part  of  the  trustees  or  directors  and  one-half  thereof  is  owned  by 
persons  favoring  the  course  of  the  other  trustees  or  directors,  the 
trustees  or  directors  or  the  stockholders  or  one  or  more  of  them 
may  present  a  petition  as  prescribed  in  section  one  hundred  and 
seventy  of  this  chapter. 

§  173.    Corporations  excepted  from  two  preceding  sections. 

Sections  one  hundred  and  seventy-one  and  one  hundred  and  sev- 
enty-two of  this  chapter  do  not  apply  to  a  savings  bank,  a  trust 
company,  a  safe  deposit  company,  or  a  corporation  formed  to  rent 
safes  in  burglar  and  fire-proof  vaults,  or  for  the  construction  or 
operation  of  a  railroad,  or  for  aiding  in  the  construction  thereof, 
or  for  carrying  on  the  business  of  banking  or  insurance,  or  intended 
to  derive  a  profit  from  the  loan  or  use  of  money. 

§  174-    Contents  of  petition. 

The  petition  must  show  that  the  case  is  one  of  those  specified  in 
sections  one  hundred  and  seventy  and  one  himdred  and  seventy- 
two  of  this  chapter,  and  must  state  the  reasons,  which  induce  the 
petitioner  or  petitioners  to  desire  the  dissolution  of  the  corporation* 


General  Cokpoeation  Law.         §§  175,  176. 

A  schedule  must  be  annexed  to  the  petition,  containing  the  follow- 
ing matters,  as  far  as  the  petitioner  or  petitioners  know,  or  have 
the  means  of  knowing  the  same : 

1.  A  full  and  true  account  of  all  the  creditors  of  the  corpora- 
tion, and  of  all  unsatisfied  engagements,  entered  into  by,  and 
subsisting  against,  the  corporation. 

2.  A  statement  of  the  name  and  place  of  residence  of  each 
creditor,  and  of  each  person  with  whom  such  an  engagement  was 
made,  and  to  whom  it  is  to  be  performed,  if  knowm ;  or,  if  either  is 
not  known,  a  statement  of  that  fact. 

3.  A  statement  of  the  sum  owing  to  each  creditor,  or  other  per- 
son specified  in  the  last  subdivision,  and  the  nature  of  each  debt, 
demand,  or  other  engagement. 

4.  A  statement  of  the  true  cause  and  consideration  of  the  in- 
debtedness to  each  creditor. 

5.  A  full,  just,  and  true  inventory  of  all  the  property  of  the 
corporation,  and  of  all  the  books,  vouchers,  and  securities,  relating 
thereto. 

6.  A  statement  of  each  incumbrance  upon  the  property  of  the 
corporation,  by  judgment,  mortgage,  pledge,  or  otherwise. 

7.  A  full,  just,  and  true  account  of  the  capital  stock  of  the 
cor])oration,  specifying  the  name  of  ea(5h  stockholder;  his  residence, 
if  it  is  known,  or  if  it  is  not  known,  stating  that  fact;  the  number 
of  shares  belonging  to  him;  the  amount  paid  in  upon  his  shares; 
and  the  amount  still  due  thereupon. 

Am'd  by  L.  1909,  ch.  240. 

§  175.    Affidavit  to  be  annexed  to  petition. 

An  affidavit,  made  by  each  of  the  petitioners,  to  the  eifect  that 
the  matters  of  fact,  stated  in  the  petition  and  the  schedule,  are  just 
and  true,  so  far  as  the  affiant  knows  or  has  the  moans  (>f  kiio\'  in.- 
the  same,  must  be  annexed  to  the  petition  and  schedule. 

§  176.    Presentation  of  petition. 

The  papers  must  be  presented  at  a  special  term  of  the  supreme 
court,  held  within  the  judicial  district,  embracing  the  county 
wherein  the  principal  office  of  the  corporation  is  located. 


§§   177-180.         Genekal  Corporation  Law.  ! 

§  177.    Corporations  without  stockholders. 

In  the  case  of  corporations  affected  by  the  provisions  of  thi^ 
article  and  not  having  stockholders,  it  shall  be  sufficient  for  the 
purposes  of  this  article  to  notify,  name  and  refer  to  the  "  mem- 
bers "  of  such  corporations,  instead  of  "  stockholders,"  as  herein 
provided. 

§  178.    Action  by  court  upon  petition  for  dissolution. 

In  a  case  specified  in  sections  one  hundred  and  sevenjty-one  and 
one  hundred  and  seventy-two  of  this  chapter  the  court  may,  in  its 
discretion,  entertain  or  dismiss  the  application.  Where  it  enter- 
tains the  application,  or  where  the  cause  is  one  of  those  specified 
in  section  one  hundred  and  seventy  of  this  chapter,  the  court  must 
make  an  order,  requiring  all  persons  interested  in  the  corporation 
to  show  cause  before  it,  or  before  a  referee  designated  in  the  order, 
at  a  time  and  place  therein  spKXjified,  not  less  than  six  weeks  after 
the  granting  of  the  order,  why  the  corporation  should  not  be 
dissolved. 
Ara'd  by  L.  1909,  ch.  240. 

§  179.  Publication  of  order  to  show  cause  why  corporation 
should  not  be  dissolved. 

A  copy  of  the  order  must  be  published,  as  prescribed  therein,  at 
least  once  in  each  of  the  three  weeks  immediately  preceding  the 
time  fixed  therein  for  showing  cause,  in  one  or  more  newspapers, 
specified  in  the  order,  published  in  the  city  or  county  wherein  the 
order  is  entered.  , 

§  1 80.    Service  of  order  to  show  cause. 

A  copy  of  the  order  must  also  be  serv^ed  upon  each  of  the  persons, 
specified  in  the  schedule  as  a  creditor  or  stockholder  of  the  corpora- 
tion, or  as  a  person  to  whom  an  engagement  of  the  corporation  is 
to  be  performed,  other  than  a  person  whose  residence  is  stated  to 
be  unknown,  or  to  be  without  the  United  States.  The  service  must 
be  made  either  personally,  at  least  ten  days  before  the  time  ap- 
pointed for  the  hearing;  or  by  depositing  a  copy  of  the  order,  at 
least  twenty  days  before  the  time  so  appointed,  in  the  post-office, 


Genekal  Cokpoeation  Law.         §§  181-184:. 

inclosed  in  a  postpaid  wrapper,  addressed  to  the  person  to  be 
served,  at  his  residence,  as  stated  in  the  schedule. 

§  181.    Entering  and  filing  order  and  papers. 

The  order  must  be  entered,  and  the  papers  must  be  filed,  within 
ten  days  after  the  order  is  made,  with  the  clerk  of  the  county  where 
the  principal  office  of  the  corporation  is  located. 

§  1 82.    Temporary  receiver. 

If  it  shall  be  made  to  appear  to  the  satisfaction  of  the  court 
that  the  corporation  is  insolvent,  the  court  may  at  any  stage  of 
the  proceedings  before  the  final  order,  on  motion  of  the  petitioners 
on  notice  to  the  attorney-general,  or  on  motion  of  the  attorney- 
general  on  notice  to  the  corporation,  appoint  a  temporary  receiver 
of  the  property  of  the  corporation,  which  receiver  shall  have  all  the 
po\\  ers  and  be  subject  to  all  the  duties  that  are  defined  as  belonging 
to  temporary  receivers  appointed  in  an  action,  in  section  one  him- 
dred  and  four  of  this  chapter.  The  court  may  also,  in  its  discre- 
tion, at  any  stage  in  the  proceeding  after  the  appointment  of  a 
temporary  receiver,  upon  like  motion  and  notice,  confer  upon 
such  temporary  receiver  the  powers  and  authority,  and  subject 

him  to  the  duties  and  liabilities  of  a  permanent  receiver,  or  as 
much  thereof  as  it  thinlcs  proper,  except  that  he  shall  not  make 

any  final  distribution  among  the  creditors  and  stockholders,  before 
final  order  in  the  proceedings,  unless  he  is  specially  directed  so  to 
do  by  the  court. 

§  183.    Application  for  appointment  of  receiver. 

Every  application  made  for  the  appointment  of  a  receiver  of  a 
corporation  other  than  applications  made  by  the  attorney-general 
on  behalf  of  the  people  of  the  state,  shall  be  made  at  a  special  term 
of  the  supreme  court  held  in  and  for  the  judicial  district  in  which 
the  principal  business  office  of  the  corporation  is  located. 

§  184.    Injunction. 

If  a  temporary  receiver  be  appointed,  the  court  may,  in  its  dis- 
cretion, on  like  motion  and  notice,  with  or  without  security,  at  any 
stage  of  the  proceeding  before  the  final  order,  grant  an  injunction, 


§§   185-189'         General  Corporation  Law. 

restraining  the  creditors  of  the  corporation,  from  beginning  any 
action  against  the  said  corporation  for  the  recovery  of  a  sum  of 
money,  or  from  taking  any  further  proceedings  in  such  an 
action  theretofore  commenced.  Such  injuction  shall  have  the 
same  effect  and  be  subject  to  the  same  provisions  of  law  as  if  each 
creditor  upon  whom  it  is  served  was  named  therein. 

§  185.    Referee. 

If  a  referee  was  not  designated  in  the  order  to  show  cause,  the 
court  may,  in  its  discretion,  appoint  a  referee  when  or  after  the 
order  is  returnable. 

§  186.    Hearing. 

At  the  time  and  place  specified  in  the  order,  or  at  the  time  and 
place  to  which  the  hearing  is  adjourned,  the  court,  or  the  referee, 
must  hear  the  allegations  and  proofs  of  the  parties,  and  determine 
the  facts. 

§  187.    Decision. 

The  decision  of  the  court,  or  the  report  of  the  referee,  must  be 
in  writing,  and  must  be  made  and  filed  with  all  convenient  speed. 
It  must  contain  a  statement  of  the  effects,  credits,  and  other  prop- 
erty, and  of  the  debts  and  other  engagements,  of  the  corporation, 
and  of  all  other  matters,  pertaining  to  its  affairs. 

§  188.    Use  of  original  papers  on  hearing. 

The  court  or  the  referee  is  entitled  to  use,  upon  the  hearing,  the 
original  petition,  ^nd  the  schedules  annexed  thereto ;  and  the  clerk 
must  transmit  them  accordingly,  upon  the  written  order  of  the 
judge,  or  of  the  referee.  In  that  case,  they  must  be  returned  with 
the  decision  or  report. 

§  189.    Amending  papers. 

The  court  may,  at  any  stage  of  the  proceedings  before  final 
order,  on  the  application  of  the  petitioners,  or  a  majority  of  them, 
or  on  the  application  of  the  temporary  receiver,  grant  an  order 
amending  the  schedules  annexed  to  the  original  petition,  by  the 
insertion   of  additional  items,  or  by  making  the  statements  or 


General  Coeporation  Law.        §§   190,  191. 

inventory  fuller  and  in  greater  detail  than  as  originally  filed,  with 
the  like  effect  as  though  said  petition  and  schedules  had  been  orig- 
inally presented  and  filed  as  amended. 

§  190.    Final  order. 

Where  the  hearing  is  before  a  referee,  a  motion  for  a  final  order 
must  be  made  to  the  court,  upon  notice  to  each  person  who  has 
made  himself  a  party  to  the  proceedings,  by  filing  with  the  clerk, 
before  the  close  of  the  hearing,  a  notice  of  his  appearance,  in  per- 
son or  by  attorney,  specifying  a  post-office  within  the  state,  where 
such  a  notice  may  be  served.  The  notice  may  be  served  as  pre- 
scribed in  the  code  of  civil  procedure  for  the  service  of  a  paper 
upon  an  attorney  in  an  action.  Where  the  hearing  was  before 
the  court,  a  motion  for  a  final  order  may  be  made  immediately, 
or  at  such  a  time  and  upon  such  a  notice,  as  the  court  prescribes. 

§  191.    Permanent  receiver. 

Upon  an  application  for  a  final  order,  if  it  appear  to  the  court 
in  a  case  specified  in  section  one  hundred  and  seventy  of  this  chap- 
ter that  the  corporation  is  insolvent,  or,  in  a  case  specified  either  in 
that  section,  or  in  section  one  hundred  and  seventy-one  and  one 
hundred  and  seventy-two  of  this  chapter,  that  for  any  reason  a 
dissolution  of  the  corporation  Vvill  be  beneficial  to  the  interests  of 
the  stockholders  and  not  injurious  to  the  public  interests,  the  court 
must  mal^e  a  final  order  dissolving  the  corporation,  and  appointing 
one  or  more  receivers  of  its  property.     But  in  the  case  of  a  solvent 
corporation,  the  court  may,  if  there  is  no  objection  by  creditors, 
dispense  with  a  receiver  and  provide  in  the  final  order  for  the  dis- 
tribution of  the  assets.     The  order  shall  be  entered  in  the  office 
of  the  clerk  of  the  county  in  which  the  principal  business  office, 
or  the  principal  place  of  business  of  the  corporation  is  located, 
and  a  certified  copy  thereof,  if  a  banking  corporation,  shall  be 
filed  in  the  office  of  the  superintendent  of  banks;  if  an  insurance 
corporation,  in  the  office  of  the  superintendent  of  insurance;  and 
if  a  business,  transportation,  railroad  or  membership  corporation, 
in  the  office  of  the  secretary  of  state.     Upon  the  entry  of  the  order 
and  the  filing  of  a  certified  copy  thereof  as  herein  provided,  the 
corporation  is  dissolved.     A  receiver  appointed  under  this  section 


§§   192-19'5.  Genekal  Cokpokation  Law. 

sliall  have  all  the  powers,  duties  and  liabilities  of  j-eceivcrs  under 
article  eleven  of  this  chapter. 

Amended  by  L.  1909,  chap.  240,  and  L.  1916,  chap.  53.  In  effect  March  21, 
1916. 

§  192.  Appointment  of  director,  trustee  or  other  officer  or 
stockholder  as  receiver. 

The  court  may,  in  its  discretion,  appoint  a  director,  trustee,  or 
other  officer,  or  a  stockholder  of  the  corporation,  a  receiver  of  its 
property. 

§  193.    Certain  sales,  transfers  and  judgments  void. 

A  sale,  assignment,  mortgage,  conveyance,  or  other  transfer,  of 
any  property  of  a  corporation,  made  after  the  filing  of  a  petition 
as  prescribed  in  this  article,  in  payment  of,  or  as  security  for,  an 
existing  or  prior  debt,  or  for  any  other  consideration ;  or  a  judg- 
ment thereafter  rendered  against  the  corporation  by  confession, 
or  upon  the  acceptance  of  an  offer,  is  absolutely  void,  as  against 
the  receiver  appointed  in  the  special  proceeding,  and  as  against  the 
creditors  of  the  corporation. 

§  1 94.    Omission,  defect  or  default  of  receiver. 

In  a  proceeding  for  the  voluntary  dissolution  of  a  corporation, 
the  court  may,  in  the  furtherance  of  justice,  upon  notice  to  the 
attorney-general,  and  the  attorney-general  not  objecting,  and  upon 
euch  further  notice  to  creditors  or  others  interested  as  the  court 
shall  direct,  which  notice  may  be  made  by  mail  upon  all  persons 
and  corporations  not  residing  or  existing  within  the  state,  relieve 
a  receiver  from  any  omission,  defect  or  default,  in  any  proceed- 
ing or  act  required  by  law  to  be  taken  or  done,  or  in  the  giving 
of  any  notice  required  by  law  to  be  given,  and  the  court  may  upK)n 
like  notice,  confirm  any  act  of  a  receiver,  and  any  decision, 
report,  order  or  judgment  made  in  such  proceeding. 

§  195.    Exception  of  certain  corporations. 

This  article  does  not  apply  to  an  incorporated  library  society, 
to  a  religious  corporation,  or  to  a  select  school  or  academy,  incor- 
porated by  the  regents  of  the  university  or  by  the  legislature,  or  to 
a  mimicapal  or  other  political  corporation. 


Geneiull  Cobpobation  Law.       §§  220,  221. 


ARTICLE  10. 

Dissolution     of     Stock     Cobpobation     without     Judicial 

Pboceedings. 

Seotion  220.    Dissolution  of  stock  corporation  before  beginning  business. 

221.    Disisolution   of    stock    corporation    before    expiration   of   time 
limit. 

§  220.  Dissolution  of  stock  corporation  before  beginning 
business. 

The  incorporators  named  in  any  certificate  of  incorporation 
filed  for  the  purpose  of  creating  a  domestic  stock  corporation, 
other  than  a  moneyed  or  transportation  corporation,  may,  before 
the  payment  of  any  part  of  the  capital,  and  before  beginning  busi- 
ness, surrender  all  corporate  rights  and  franchises,  by  signing, 
verifying  and  filing  in  the  office  of  the  secretary  of  state  and  the 
clerk  of  th^  county  where  the  certificate  of  incorporation  is  filed, 
a  certificate  setting  forth  the  names  of  the  incorporators,  that  no 
part  of  the  capital  has  been  paid,  that  there  are  no  liabilities,  that 
such  business  has  not  been  begun,  and  surrendering  all  rights  and 
franchises ;  and  proof  of  the  facts  set  forth  in  such  certificate  to  the 
satisfaction  of  the  secretary  of  state;  and  thereupon  the  said  cor- 
poration shall  be  dissolved,  and  its  corporate  existence  and  power 
shall  cease.  In  case  any  incorporator  of  such  a  corporation  shall 
be  deceased,  then  the  aforesaid  certificate  may  be  made  by  the 
surviving  incorporators  providing  two  years  shall  have  elapsed 
since  the  date  of  its  incorporation,  but  in  such  case  the  certificate 
shall  set  forth  the  fact  that  one  or  more  of  said  incorporators  is 
deceased. 

§  221.  Dissolution  of  stock  corporation  before  expiration  of 
time  limit. 

Any  stock  corporation,  except  a  moneyed  or  a  railroad  corpora- 
tion, may  be  dissolved  before  the  expiration  of  the  time  limited 
in  its  certificate  of  incorporation  or  in  its  charter  as  follows: 

1.  The  board  of  directors  of  any  such  corporation  may  at  a 
meeting  called  for  that  nurpose,  upon  at  least  three  days'  notice 


§  221.  General  Coepoeation  Law. 

tx)  each  director,  bj  a  vote  of  a  majority  of  the  whole  board,  adopt 
a  resolution  that  it  is  in  their  opinion  advisable  to  dissolve  such 
corporation  forthwith,  and  thereupon  shall  call  a  meeting  of  the 
stocldiolders  for  the  purpose  of  voting  upon  a  proposition  that  such 
corporation  be  forthwith  dissolved.  Such  meeting  of  the  stock- 
holders shall  be  held  not  less  than  thirty  nor  more  than  sixty 
days  after  the  adoption  of  such  resolution,  and  the  notice  of 
the  time  and  place  of  such  meeting  so  called  by  the  directors 
shall  be  published  in  one  or  more  newspapers  published  and  cir- 
culating in  the  county  wherein  such  corporation  has  its  principal 
office,  at  least  once  a  \\eek  for  three  weeks  successively  next  pre- 
ceding the  time  appointed  for  holding  such  meeting,  and  on  or 
before  the  day  of  the  first  publication  of  such  notice,  a  copy 
thereof  shall  be  served  personally  on  each  stockholder,  or  mailed 
to  him  at  his  last  known  post-office  address.  Such  meeting  shall 
be  held  in  the  city,  town  or  village  in  which  the  last  preceding 
annual  meeting  of  the  corporation  was  held,  and  said  meeting 
may,  on  the  day  so  appointed,  by  the  consent  of  a  majority  in 
interest  of  the  stockholders  present,  be  adjourned  from  time  to 
time,  and  notice  of  such  adjournment  shall  be  published  in  the 
newspapers  in  which  the  notice  of  the  meeting  is  published.  If 
at  any  such  meeting  the  holders  of  two-thirds  in  amount  of  the 
stock  of  the  corporation,  then  outstanding,  shall,  in  person  or  by 
attorney,  consent  that  such  dissolution  shall  take  place  and  signify 
such  consent,  in  writing,  then  such  corporation  shall  file  such 
cx)nsent,  attested  by  its  secretary  or  treasurer,  and  its  president 
or  vice-president,  together  with  the  powers  of  attorney  signed  by 
such  stockholders  executing  such  consent  by  attorney,  with  a 
statement  of  the  names  and  residences  of  the  then  existing  board 
of  directors  of  said  corporation,  and  the  names  and  residences  of 
its  officers  duly  verified  by  the  secretary  or  treasurer  or  president 
of  said  corporation,  in  the  office  of  the  secretary  of  state. 

2.  The  secretary  of  state  shall  thereupon  issue  to  such  corpora- 
tion, in  duplicate,  a  certificate  of  the  filing  of  such  papers  and 
that  it  appears  therefrom  that  such  corporation  has  complied  with 
this  section  in  order  to  be  dissolved,  and  one  of  such  duplicate 
certificates  shall  be  filed  by  such  corporation  in  the  office  of  the 


General  Oorpoeation  Law.  §  221* 

clerk  of  the  county  in  which  such  corporation  has  its  principal 
office ;  and  thereupon  such  corporation  shall  be  dissolved  and  shall 
cease  to  carry  on  business,  except  for  the  purpose  of  adjusting  and 
winding  up  its  business.  The  board  of  directors  shall  cause  a 
copy  of  ^uch  certificate  to  be  published  at  least  once  a  week  for 
two  weeks  in  one  or  more  newspapers  published  and  circulating 
in  the  county  in  which  the  principal  office  of  such  corporation  is 
located,  and  at  the  expiration  of  such  publication,  the  said  cor- 
poration by  its  board  of  directors  shall  proceed  to  adjust  and 
wind  up  its  business  and  affairs  with  power  to  carry  out  its  con- 
tracts and  to  sell  its  assets  at  public  or  private  sale,  and  to  apply 
the  same  in  discharge  of  debts  and  obligations  of  such  corpora- 
tion, and,  after  paying  and  adequately  providing  for  the  payment 
of  such  debts  and  obligations,  to  distribute  the  balance  of  assets 
among  the  stockholders  of  said  corporation,  according  to  their 
respective  rights  and  interests. 

:5.  Said  corporation  shall  nevertheless  continue  in  existence  for 
the  purpose  of  paying,  satisfying  and  discharging  any  existing 
debts  or  obligations,  collecting  and  distributing  its  assets  and 
doing  all  other  acts  required  in  order  to  adjust  and  wind  up  its 
business  and  affairs,  and  may  sue  and  be  sued  for  the  purpose  of 
enforcing  such  debts  or  obligations,  until  its  business  and  affairs 
are  fully  adjusted  and  wound  up, 

4.  After  paying  or  adequately  providing  for  the  debts  and 
obligations  of  the  corporation  the  directors  may,  with  the  written 
consent  of  the  holders  of  two-thirds  in  amount  of  the  capital  stock, 
sell  the  remaining  assets  or  any  part  thereof  to  a  corporation 
organized  under  the  laws  of  this  or  any  other  state,  and  engaged 
in  a  business  of  the  same  general  character,  and  take  in  payment 
therefor  the  stock  or  bonds  or  both  of  such  corporation  and  dis- 
tribute them  among  the  stockholders,  in  lieu  of  money,  in  pro- 
portion to  their  interest  therein,  but  no  such  sale  shall  be  valid 
as  against  any  stockholder,  who,  within  sixty  days  after  the  mail- 
ing of  notice  to  him  of  such  sale,  shall  apply  to  the  supreme) 
court  in  the  manner  provided  by  section  seventeen  of  the  stock 
cx)rporation   law,   for  an  appraisal  of  the  value  oi   his  interest 


§  225,  226.        General  Corporation  Law. 

in  the  assets  so  sold ;  unless  within  thirty  days  after  such  appraisal 
the  stockholders  consenting  to  such  sale,  or  some  of  them,  shall 
pay  to  such  objecting  stockholder  or  deposit  for  his  account,  in 
the  manner  directed  by  the  court,  the  amount  of  such  appraisal  aud 
upon  such  payment  or  deposit  the  interest  of  such  objecting  stock- 
holder shall  vest  in  tlie  person  or  persons  making  such  payment 
or  deposit. 


ARTICLE  10-a. 

Provisions     Applicable     to     Temporary     and     Permanent 
Receivers  of  Corpop^tions. 

Section  225.    Security. 

226.  Removal  or  new  bond.  ^ 

227.  Notice  to  sureties  upon  accounting. 

§  225.    Security. 

A  receiver,  appointed  in  an  action  or  special  proceeding,  mast, 
before  entering  upon  his  duties,  execute  and  file  with  the  proper 
clerk,  a  bond  to  the  people,  wdth  at  least  two  sufficient  sureties,  in 
a  penalty  fixed  by  the  court,  judge,  or  referee,  making  the  appoint- 
ment, conditioned  for  the  faithful  discharge  of  his  duties  as  re- 
ceiver ;  and  the  execution  of  any  such  bond  by  any  fidelity  or  surety 
company  authorized  by  the  laws  of  this  state  to  transact  business, 
shall  be  equivalent  to  the  execution  of  said  bond  by  two  sureties. 
But  this  section  does  not  apply  to  a  case  where  special  provision 
is  made  by  law  for  the  security  to  be  given  by  a  receiver  or  for 
increasing  tlie  same. 
Added  by  L.  1909,  ch.  240. 

§  226.    Removal  or  new  bond. 

The  court,  or,  where  the  order  was  made  out  of  court,  the  judge 
making  the  order,  by  or  pursuant  to  which  the  receiver  was  ap- 
pointed^ or  his  successor  in  office,  may,  at  any  time,  remove  the 
receiver,  or  direct  him  to  give  a  new  bond,  with  new  sureties,  with 
tJie  like  condition  specified  in  the  last  section.     But  this  section 


General  Corporation  Law.  §  227. 

does  not  apply  to  a  case  where  special  provision  is  made  by  law 
for  the  security  to  be  given  by  a  receiver,  or  for  increasing  the 
same,  or  for  removing  a  receiver. 
Added  by  L.  1900,  ch.  240. 

§  227.    Notice  to  sureties  upon  accounting. 

A  receiver  wlio,  having  executed  and  filed  a  bond  as  provided 
for  in  section  two  hundred  and  twenty-five  or  section  two  hundred 
and  twenty-six  of  this  chapter,  before  presenting  his  accounts  as 
receiver,  must  give  notice  to  the  surety  or  sureties  on  his  official 
bond,  of  his  intention  to  present  his  accounts,  not  less  than  eight 
days  before  the  day  set  for  the  hearing  on  said  accounting.  The 
same  notice  must  be  given  to  such  surety  or  sureties  where  the 
accounting  is  ordered  on  the  petition  of  a  person  or  persons  other 
tlian  the  receiver,  and  in  no  case  shall  the  receiver's  accounts  be 
passed,  settled  or  allowed,  unless  the  said  notice  provided  for  in 
this  section  shall  have  first  been  given  to  the  surety  or  sureties  on 
tlie  official  bond  of  such  receiver. 
Added  by  L.  1909,  ch.  240. 

AETICLE   11. 

Powers,  Duties  and  Liabilities  of  Receivers  of  Corporation. 

Sbotion  230.  Application  of  this  article. 

231.  Receiver  trustee  of  property. 

232.  Receiver's  title  to  property. 

233.  Transfer  of  assets  of  corporation  to  receiver. 

234.  Security  of  receiver. 

235.  Authority  of  single  receiver. 

236.  Authority  where  there  is  more  than  one  receiver. 

237.  Surviving  reoeiverB. 

238.  Oath  of  receiver. 

239.  General  powers  of  receivers. 

240.  Power  of  receiver  to  institute  proceedings  to  recover  assets 

241.  Power  of  receiver  in  the  settlement  of  controversies. 

242.  Power  of  receiver  to  employ  counsel. 

243.  Power  of  receiver  to  hold  real  property. 

244.  Power  of  receiver  to  recover  stock  subscriptions. 

245.  Duty  of  receiver  to  convert  assets  into  money. 

246.  Duty  of  receiver  as  to  private  sales. 

247.  Duty  of  receiver  to  keep  accounts. 


§§  230,  231.        General  Coepobation  Law. 

Section  248.    Duty  of  receiver  to  serve  copy  of  report  upon  attornoy-general 
and  superintendent  of  banks. 

249.  Duty  of  certain  receivers  to  make  reports. 

250.  Duty  of  receivers  to  give  notice  to  creditors, 

251.  Delivery  of  property  and  payment  of  debts  to  receiver  after 

notice. 

252.  Penalty  for  concealing  property  from  receiver. 

253.  Duty  of  receiver  to  call  creditors*  meeting. 

254.  Proceedings  at  creditors'  meeting. 

255.  Deduction  of  disbursements  and  commissions  by   receiver. 
258.    Refunding  consideration  of  subsisting  contracts. 

257.  Retention    of    funds    for    subsisting    contracts    and    pending 

suits. 

258.  Payment  of  debts  not  due. 

259.  Allowance  of  set-offs. 

260.  Penalties  recovered  by  receiver. 

261.  Order  of  payment  by  receiver. 

262.  Failure  to  file  claim  before  first  dividend. 

263.  Second  dividend  by  receiver. 

264.  Surplus  to  stockholders. 

265.  Disposition   of   moneys   retained   by    receiver   for   suits. 
286.  Duty  of  receiver  as  to  unclaimed  dividend. 

267.  Effect  of  failure  to  file  claim  before  second  dividend. 

268.  Final  accounting  by  receiver. 

269.  Notice  of  final  accounting. 

270.  Hearing  on  final  accounting. 

271.  Reference  of  final  account. 

272.  Further  accounting. 

273.  Removal  of  receiver. 

274.  Vacancy. 

275.  Renunciation  by  receiver. 

276.  Control  of  receiver  by  court. 

277.  Commissions  and  expenses  of  receiver  in  voluntary  dissolution. 

278.  Commissions    and    expenses    of   receiver    except    in    voluntary 

dissolution. 

§  230.    Application  of  this  article. 

Unless  otherwise  provided  the  provisions  of  this  article  shall 
apply  only  to  permanent  receivers  appointed  pursuant  to  section 
one  hundred  and  six  or  section  one  hundred  and  ninety-one  of  this 
chapter. 

§  231.    Receiver  trustee  of  property. 

Permanent  receivers  shall  he  trustees  of  the  property  for  the 
benefit  of  the  creditors  of  the  corDoration  and  of  its  stockholders. 


General  Corporation  Law.        §§  232-236. 

§  232.    Receiver's  title  to  property. 

Such  receivers  shall,  from  the  time  of  their  having  filed  the 
security  required  by  law,  be  vested  with  all  the  property,  real  or 
personal,  vested  or  contingent  of  the  corporation. 

Am'd  by  L.  1909,  ch.  240,  and  L.  1913,  eh.  766. 

§  233.    Transfer  of  assets  of  corporation  to  receiver. 

In  all  cases  where  receivers  have  been  or  shall  be  appointed  for 
any  corporation  of  this  state  other  than  an  insurance  company  on 
application  by  the  attorney-general,  all  property,  real  and  personal, 
and  all  securities  of  every  kind  and  nature  belonging  to  such  cor- 
poration, no  matter  where  located  or  by  whom  held,  shall  be  trans- 
ferred to,  vested  in  and  held  by  such  receiver ;  provided,  however, 
that  such  transfer  shall  only  be  made  when  directed  by  an  order  of 
the  supreme  court,  due  notice  of  the  application  for  such  order 
having  been  made  on  the  attorney-general  and  the  custodian  of  the 
funds,  securities  or  property. 

§  234.    Security  of  receiver. 

Before  entering  upon  the  duties  of  their  appointment,  such 
receivers  shall  give  such  security  to  the  people  of  the  state,  and  in 
such  penalty,  as  the  court  shall  direct,  conditioned  for  the  faithful 
discharge  of  the  duties  of  their  appointment,  and  for  the  due 
accounting  for  all  moneys  received  by  them. 

§  235.    Authority  of  single  receiver. 

When  one  receiver  only,  shall  be  appointed,  all  the  provisions 
herein  contained,  in  reference  to  several  receivers  shall  apply  to 
him. 

§  236.    Authority  where  there  is  more  than  one  receiver. 

When  there  are  more  receivers  than  one  appointed,  the  debts  and 
property  of  the  corporation  may  be  collected  and  received  by  any 
one  of  them ;  and  when  there  are  more  than  two  receivers  ap- 
pointed, every  power  and  authority  conferred  on  the  receivers  may 
be  exercised  by  any  two  of  thenu 


§§  237-239.        General  Corporation  Law. 

§  237.    Surviving  receivers. 

The  survivor  or  survivors  of  any  receivers  shall  have  all  the 
powers  and  rights  given  to  receivers.  All  property  in  the  hands 
of  any  receiver  at  the  time  of  his  death,  removal  or  incapacity, 
shall  be  delivered  to  the  remaining  receiver  or  receivers,  if  there 
be  any;  or  to  the  successor  of  the  one  so  dying,  removed  or  inca- 
pacitated ;  who  may  demand  and  sue  for  the  same. 

§  238.    Oath  of  receiver. 

Before  proceeding  to  the  discharge  of  any  of  their  duties,  all 
such  receivers  shall  take  and  subscribe  an  oath,  that  they  will  well 
and  truly  execute  tlie  trust  by  their  appointment  reposed  in  them, 
according  to  the  best  of  their  skill  and  understanding;  which  oath 
shall  be  filed  vdth  the  officer  or  court,  that  appointed  them. 

§  239.    General  powers  of  receivers. 

The  said  receivers  shall  have  power: 

1.  To  sue  in  their  own  names  or  otherwise,  and  recover  all 
the  property,  debts  and  things  in  action,  belonging  or  due  or 
to  become  due  to  such  corporation,  whether  accruing  or  maturing 
before  or  after  the  dissolution  thereof  and  whether  vested  or  con- 
tingent at  the  time  of  such  dissolution,  in  the  same  manner  and 
with  the  like  effect  as  such  corporation  might  or  could  have  done 
if  no  receivers  had  been  appointed ;  and  no  set-off  shall  be  allowed 
in  any  such  suit,  for  any  debt,  unless  it  was  owing  to  such 
creditor  by  such  corporation  before  the  appointment  of  the  re- 
ceiver of  such  corporation,  or  unless  it  shall  have  been  duly  con- 
tracted by  such  receiver  subsequent  to  his  appointment;  not- 
withstanding the  notice  to  creditors  the  receivers  may  sue  for 
and  recover  any  property  or  effects  of  the  corporation  and  any 
debts  due  to  it,  at  any  time,  before  the  day  appointed  for  the 
delivery  or  payment  thereof ; 

2.  To  take  into  their  hands,  all  the  property  of  such  corpora- 
tion, whether  attached,  or  delivered  to  them,  or  afterwards  dis- 
covered;  and  all  books,  vouchers  and  securities  relating  to  the, 
same; 


General  Corporation  Law.  §  239. 

3.  In  the  case  of  a  non-resident,  absconding  or  concealed  debtor, 
to  demand  and  receive  of  every  sheriff  vrho  shall  have  attached 
any  of  the  property  of  snch  debtor,  or  who  shall  have  in  his  hands, 
any  moneys  arising  from  the  sale  of  such  property,  all  snch  prop- 
erty and  moneys,  on  paying  him  his  reasonable  costs  and  charges, 
for  attaching  and  keeping  the  same,  to  be  allowed  by  the  court 
having  jurisdiction ; 

4.  From  time  t/O  time,  to  sell  at  public  auction,  all  the  prop- 
erty, real  and  personal,  vested  in  them,  which  shall  come  to  their 
hands,  after  giving  at  least  fourteen  days'  public  notice  of  the 
time  and  place  of  sale,  and  also  publishing  the  same  for  two  weeks 
in  a  newspaper,  printed  in  the  county,  where  the  sale  shall  be 
made,  if  there  be  one ; 

5.  To  allow  such  credit  on  the  sale  of  real  property  by  them,  as 
they  shall  deem  reasonable,  subject  to  the  provisions  of  this  article 
for  not  more  than  three-fourths  of  the  purchase  money;  which 
credit  shall  be  secured  by  a  bond  of  the  purchaser,  and  a  mortgage 
on  the  property  sold; 

6.  On  such  sales,  to  execute  the  necessary  conveyances  and  bills 
of  sale. 

7.  To  redeem  all  mortgages  and  conditional  contracts  and  all 
pledges  of  personal  property,  and  to  satisfy  any  judgments,  which 
may  be  an  incumbrance  on  any  property  so  sold  by  them ;  or  to 
sell  such  property  subject  to  such  mortgages,  contracts,  pledges  or 
judgments; 

8.  To  settle  all  matters  and  accounts  between  such  corporation 
and  its  debtors,  or  creditors,  and  to  examine  any  person  touching 
such  matters  and  accounts,  on  oath,  to  be  administered  by  either 
of  them ; 

9.  Under  the  order  of  the  court  appointing  them,  to  compound 
with  any  person  indebted  to  such  corporation  and  thereupon  to 
discliarge  all  demands  again^  such  person. 

Amended  by  L.  1913,  chap.  766. 


§  240.  General  Corporation  Law. 

§  240.    Power  of  receiver  to  institute  proceedings  to  recover 
assets. 

Whenever  any  receiver  of  a  domestic  corporation,  or  of  the  prop- 
erty within  this  state  of  any  foreign  corporation,  shall  have  been 
appointed  and  qualiiied,  as  provided  in  articles  five,  six,  seven, 
nine,  eleven  or  twelve  of  this  chapter  either  before,  upon,  or  after 
final  judgment  or  order  in  the  action  or  special  proceeding  in  which 
such  appointment  was  made,  and  shall,  by  his  own  verified  petition, 
affidavit  or  otlier  competent  proof,  show  to  the  supreme  court,  at  a 
special  term  thereof,  held  within  the  judicial  district  wherein 
such  appointment  was  made,  that  he  has  good  reason  to  believe 
that  any  officer,  stockholder,  agent  or  employee  of  such  corporation, 
or  any  otlier  person  whomsoever,  has  embezzled  or  concealed,  or 
withholds  or  has  in  his  possession  or  under  his  control,  or  has 
wrongfully  disposed  of,  any  property  of  such  corporation  which  of 
right  ought  to  be  surrendered  to  the  receiver  thereof;  or  that 
any  person  can  testify  concerning  the  embezzlement,  concealment, 
withholding,  possession,  control  or  wrongful  disposition  of  any 
such  property,  the  court  shall  make  an  order,  with  or  without 
notice,  commanding  such  person  or  persons  to  appear  at  a  time 
and  place  to  be  designated  in  the  order,  before  the  court  or  before 
a  referee  named  by  the  court  for  that  purpose,  and  to  submit  to 
an  examination  concerning  such  embezzlement,  concealment,  with- 
holding, possession,  control  or  wrongful  disposition  of  such  prop- 
erty ;  and  at  the  time  of  making  such  order  or  at  any  time  there- 
after, the  court  may,  in  its  discretion,  enjoin  and  restrain  the 
person  or  persons  so  ordered  to  appear  and  be  examined  from  in 
any  manner  disposing  of  any  property  of  such  corporation  which 
may  be  in  the  possession  or  under  the  control  of  the  person  so  or- 
dered to  be  examined,  until  the  further  order  of  the  court  in  rela- 
tion thereto.  'No  person  so  ordered  to  appear  and  be  examined 
shall  be  excused  from  answering  any  question  on  the  ground  that 
his  answer  might  tend  to  convict  him  of  a  criminal  offense;  but 
his  testimony  taken  upon  such  examination  shall  not  be  used 
against  him  in  any  criminal  action  or  proceeding. 

Any  person  so  ordered  to  appear  and  be  examined  shall  be 
entitled  to  the  same  fees  and  mileage,  to  be  paid  at  the  time  of 


General  Coeporation  Law.  §  241. 

serving  the  order,  as  are  allowed  by  law  to  witnesses  subpoenaed 
to  attend  and  testify  in  an  action  in  the  supreme  court,  and  shall 
be  subject  to  the  same  penalties  upon  failure  to  appear  and  tes- 
tify in  obedience  to  such  an  order  as  are  provided  by  law  in  the 
case  of  witnesses  who  fail  to  obey  a  subpoena  to  appear  and  testify 
in  an  action. 

Any  person  appearing  for  examination  in  obedience  to  such 
order  shall  be  sworn  by  the  court  or  referee  to  tell  the  truth,  and 
shall  be  entitled  to  be  represented  on  such  examination  by  counsel, 
and  may  be  cross-examined,  or  may  make  any  voluntary  statement 
in  his  own  behalf  concerning  the  subject  of  his  examination  which 
may  seem  to  him  desirable  or  pertinent  thereto. 

The  court  before  which  such  examination  is  taken,  as  well  as 
the  referee,  if  one  be  appointed  for  that  purpose,  shall  have  power 
to  adjourn  such  examination  from  time  to  time,  and  may  rule 
upon  any  question  or  objection  arising  in  the  course  of  such  exami- 
nation, to  the  same  extent  that  might  be  done  if  the  person  so 
examined  were  testifying  as  a  witness  in  the  trial  of  an  action. 

When  the  examination  of  any  person  under  such  order  shall 
be  concluded,  the  testimony  shall  be  signed  and  sworn  to  by  the 
person  so  examined,  and  shall  be  filed  in  the  office  of  the  clerk  of 
the  county  where  the  action  is  pending,  or  was  tried,  in  which 
the  receiver  was  appointed;  and  if  from  such  testimony  it  shall 
appear  to  the  satisfaction  of  the  court  that  any  person  so  exam- 
ined is  wrongfully  concealing  or  withholding,  or  has  in  his  posses- 
sion or  under  his  control,  any  property  which  of  right  belongs  to 
such  receiver,  the  court  may  make  an  order  commanding  the  per- 
son so  examined  forthwith  to  deliver  the  same  to  such  receiver, 
who  shall  hold  the  same  subject  to  the  further  order  of  the  cx)urt 
in  relation  thereto;  and  otherwise,  the  court  may,  at  the  con- 
clusion of  any  such  examination,  make  such  final  order  in  the 
premises  as  the  interests  of  justice  require. 

§  241 .    Power  of  receiver  in  the  settlement  of  controversies. 

If  any  controversy  shall  arise  between  the  receivers  and  any 
other  jierson,  in  the  settlement  of  any  demands  against  such  cor- 
poration, or  of  debts  due  to  auch  corporation  tbe  same  may  be 


§  24:1.  General  CoRroRATioN  Law. 

referred  to  one  or  more  indifferent  persons,  who  may  be  agreed 
upon  by  the  receivers  and  tlie  party,  with  whom  such  controveray 
shall  exist,  by  a  writing  to  that  effect,  signed  by  them. 

If  such  referee  or  referees  be  not  selected  by  agreement,  then 
the  receivers  or  the  other  party  to  the  controversy,  provided  no 
action  at  law  is  pending  arising  out  of  any  such  debts  or  demands, 
may  serve  a  notice  of  their  intention  to  apply  to  any  judge  of  the 
gupreme  court  at  chambers,  residing  in  the  same  district  vrith  said 
receivers,  for  the  appointment  of  one  or  more  referees,  specifying 
the  time  and  place  when  such  application  will  be  made,  which 
notice  shall  be  served  at  least  ten  days  before  the  time  so  therein 
specified. 

On  the  day  so  specified,  upon  due  proof  of  the  service  of  such 
notice,  the  judge  before  whom  the  application  is  made  may,  in 
his  discretion,  proceed  to  select  one  or  more  referees,  the  same  in 
all  respects  as  they  are  now  selected  according  to  the  rules  and 
practice  of  the  supreme  court. 

When  any  witness  to  such  controversy  shall  reside  out  of  the 
county  where  the  said  receivers  resided  at  the  time  of  their 
appointment,  the  referee  or  referees  appointed  to  hear  said  con- 
troversy shall  have  pmver  to  issue  a  commission  or  commissions 
in  like  manner  as  justices  of  the  peace  are  now  authorized  to  issue 
the  same,  and  the  testimony  so  taken  shall  be  returned  to  said 
referee  or  referees  in  the  same  manner,  and  be  read  before  them 
on  a  hearing,  in  like  manner  as  testimony  taken  on  commission 
before  justices  of  the  peace. 

The  officer  before  whom  they  shall  be  selected,  shall  certify  such 
selection  in  writing.  Such  certificate,  or  the  written  agreement 
of  the  parties,  shall  be  filed  by  the  receivers  in  the  office  of  a  clerk 
of  the  supreme  court,  and  an  order  shall  thereupon  be  entered 
by  such  clerk  in  vacation  or  in  term,  appointing  the  persons  so 
selected  to  determine  the  controversy. 

Such  referees  shall  have  the  same  powers,  and  be  subject  to  the 
like  duties  and  obligations,  and  shall  receive  the  same  compensa- 
tion, as  referees  appointed  by  the  supreme  court,  in  personal 
actions  pending  therein. 

The  report  of  the  referees  shall  be  filed  in  the  same  office  where 
the  order  for  their  appointment  was  entered,  and  shall  be  con- 
clusive on  the  rights  of  the  parties,  if  not  set  aside  by  the  court 


General  Corporation  Law.         §§  242,  243. 

§  242,    Power  of  receiver  to  employ  counsel. 

If  the  receiver  of  a  corporation  employs  counsel  he  shall  within 
three  months  after  he  has  qualified  as  receiver  enter  into  a  written 
contract  fixing  the  compensation  of  such  counsel  at  not  exceeding 
a  certain  amount  or  a  certain  percentage  of  the  sums  received  and 
disbursed  by  him,  which  contract  must  be  approved  by  the  supreme 
court,  on  at  least  eight  days'  notice  to  the  attorney-general.  A 
payment  by  such  receiver  to  his  counsel  on  account  of  services  shall 
only  be  made,  pursuant  to  an  order  of  the  court,  on  notice  to  the 
attorney-general  and.  subject  to  review  on  the  final  accounting. 
A  contract  with  counsel  shall  not  be  made  for  a  longer  period 
than  eighteen  months,  but  may  be  renewed  from  time  to  time  for 
periods  of  not  more  than  one  year,  if  approved  by  the  supreme 
court  on  at  least  eight  days'  notice  to  the  attorney-general.  In 
c^se  of  the  intervention  of  any  policy-holder  or  depositor,  by  per- 
mission of  the  court,  such  policy-holder  or  depositor  shall  defray 
the  legal  expenses  thereof,  and  no  allowance  shall  be  made  for 
costs  or  fees  to  any  attorney  of  such  policy-holder  or  depositor. 
It  shall  be  unlawful  for  receivers  of  an  insurance,  banking  or 
railroad  corporation,  or  trust  company  to  pay  to  any  attorney  or 
counsel  any  costs,  fees  or  allowances  until  the  amounts  thereof 
shall  have  been  stated  to  the  special  term  as  provided  in  section 
two  hundred  and  forty-nine  of  this  chapter,  as  expenses  incurred, 
and  shall  have  been  approved  by  that  court.,  by  an  order  of  the 
court  duly  entered;  and  any  such  order  shall  be  the  subject  of 
review  by  the  appellate  division  and  the  court  of  appeals  on  an 
appeal  taken  therefrom  by  any  party  aggrieved  thereby. 

§  243.    Power  of  receiver  to  hold  real  property. 

A  receiver,. appointed  by  or  pursuant  to  an  order  or  a  judgment, 
in  an  action  in  the  supreme  court  or  a  county  court,  or  in  a  special 
proceeding  for  the  voluntary  dissolution  of  a  corporation,  may 
take  and  hold  real  property,  upon  such  trusts  and  for  such  pur- 
poses as  the  court  directs,  subject  to  the  direction  of  the  court, 
from  time  to  time,  respecting  the  disposition  thereof. 


§§  244-248.         General  Cokpoeation  Law. 

§  244.    Power  of  receiver  to  recover  stock  subscriptions. 

If  there  shall  be  any  sum  remaining  due  upon  any  share  of 
stock  subscribed  in  such  corporation,  the  receiver  shall  immediately 
proceed  to  recover  the  same,  unless  the  person  so  indebted  shall  be 
wholly  insolvent;  and  for  that  purpose  may  commence  and  pros- 
ecute any  action  or  proceeding  for  the  recovery  of  such  sum,  with- 
out the  consent  of  any  creditors  of  such  corporation. 

§  245.    Duty  of  receiver  to  convert  assets  into  money. 

The  receivers  shall,  as  speedily  as  possible,  convert  the  prop- 
erty, real  and  personal,  of  the  corporation  into  money. 

§  246.    Duty  of  receiver  as  to  private  sales. 

A  receiver  duly  appointed  in  this  state  by  and  pursuant  to  a 
judgment  in  an  action,  or  by  and  pursuant  to  an  order  in  a  special 
proceeding,  may,  upon  application  to  the  court  by  which  such 
judgment  was  rendered,  or  such  order  was  made,  and  upon  notice 
to  such  parties  as  may  be  entitled  to  notice  of  applications  made  in 
such  action  or  special  proceeding,  be  authorized  by  the  said  court 
to  sell  or  convey  the  property,  whether  real  or  personal,  of  the 
corporation  of  which  he  is  the  receiver,  at  private  sale,  upon  such 
terms  and  conditions  as  the  court  may  direct 

§  247.    Duty  of  receiver  to  keep  accounts. 

They  shall  keep  a  regular  account  of  all  moneys  received  by 
them  as  receivers ;  to  which,  every  creditor,  or  other  person  inter- 
ested therein,  shall  be  at  liberty,  at  all  reasonable  times,  to  have 
recourse. 

§  248.  Duty  of  receiver  to  serve  copy  of  report  upon  attor- 
ney-general and  superintendent  of  banks. 

All  receivers  of  insolvent  corporations  who  are  required  by  law 
to  make  and  file  reports  of  their  proceedings  shall  at  the  time  of 
making  and  filing  such  reports,  serve  a  copy  thereof  upon  the 
attorney-general  of  this  state,  and  receivers  of  such  corporations 
as  report  to,  and  are  under  the  supervision  of,  the  banking  depart- 
ment shall  on  the  first  day  of  January  and  July  of  each  year, 


General  CoRPORATioisr  Law.         §§  249,  250. 

during  the  continuance  of  their  respective  trusts,  file  with  the 
superintendent  of  banks  a  report,  verified  by  oath,  in  such  form  as 
the  superintendent  may  prescribe,  showing  the  condition  of  their 
respective  trusts.  In  case  any  receiver  of  an  insolvent  corpo- 
ration shall  neglect  to  make  and  file  a  report  of  his  proceedings 
for  thirty  days  after  the  time  he  is  required  by  law  to  make 
and  file  such  report,  or  shall  neglect  for  the  same  length  of  time 
to  serve  a  copy  thereof  on  the  attorney-general,  as  required  by 
tliis  section  the  attorney-general  may  mal^e  a  motion  in  the  supreme 
court  for  an  order  to  compel  the  making  and  filing  and  serving  a 
copy  on  him  of  such  report,  or  for  the  removal  of  such  receiver 
from  his  office. 

§  249.    Duty  of  certain  receivers  to  make  reports. 

It  shall  be  the  duty  of  every  receiver  of  an  insurance,  banking 
or  railroad  corporation,  or  trust  company,  to  present  every  six 
months  to  the  special  term  of  the  supreme  court,  held  in  the  judi- 
cial district  wherein  the  place  of  trial  or  venue  of  the  action  or 
special  proceeding  in  which  he  was  appointed  may  then  be,  on  the 
first  day  of  its  first  sitting,  after  the  expiration  of  such  six  months, 
and  to  file  a  copy  of  the  same,  if  a  receiver  of  a  bank  or  trust  com- 
pany, with  the  superintendent  of  banks ;  if  a  receiver  of  an  insur- 
ance company,  with  the  superintendent  of  insurance;  and  in 
each  case  with  the  attorney-general,  an  account  exhibiting  in 
detail  the  receipts  of  his  trust,  and  the  expenses  paid  and  incurred 
therein  during  the  preceding  six  months.  Of  the  intention  to 
present  such  account,  as  aforesaid,  the  attorney-general,  and  also 
the  surety  or  sureties  on  the  official  bond  of  such  receiver,  shall 
be  given  eight  days'  notice  in  writing;  and  the  attorney-general 
shall  examine  the  books  and  accounts  of  such  receiver  at  least 
once  every  twelve  months. 

§  250.    Duty  of  receivers  to  give  notice  to  creditors. 

The  receivers,  immediately  upon  their  appointment,  shall  give 
notice  thereof  which  shall  be  published  for  three  weeks  in  a  news- 
paper printed  in  the  county  where  the  principal  place  of  con- 
ducting the  business  of  such  corporation  shall  have  been  situated ; 
and  therein  shall  require, 


§§  251-253.         Geneeal  Coepoeation  Law. 

1.  All  persons  indebted  to  such  corporation,  by  a  day  and  at  a 
place  therein  to  be  specified,  to  render  an  account  of  all  debts  and 
sums  of  money  owing  by  them  respectively,  to  such  receivers  and 
to  pay  the  same. 

2.  All  persons  having  in  their  possession  any  property  or 
effects  of  such  corporation  to  deliver  the  same  to  the  said  receivers 
by  the  day  so  appointed. 

3.  All  the  creditors  of  such  corporation  to  deliver  their  respec- 
tive accounts  and  demands  to  the  receivers  or  one  of  them,  by  a 
day  to  be  therein  specified,  not  less  than  forty  days  from  the  first 
publication  of  such  notice. 

4.  All  persons  holding  any  open  or  susbsisting  contract  of  such 
corporation,  to  present  the  same  in  writing  and  in  detail  to  such 
receivers,  at  the  time  and  place  in  such  notice  specified. 

§  251.  Delivery  of  property  and  payment  of  debts  to  re- 
ceiver after  notice. 

After  the  first  publication  of  the  notice  of  the  appointment  of 
receivers,  every  person  having  possession  of  any  property  belong- 
ing to  such  corporation,  and  every  person  indebted  to  such  corpo- 
ration, shall  account  and  answer  for  the  amount  of  such  debt  and 
for  the  value  of  such  property  to  the  said  receivers,      * 

§  252.    Penalty  for  concealing  property  from  receiver. 

Every  person  indebted  to  such  corporation,  or  having  the  posses- 
sion or  custody  of  any  property  or  thing  in  action,  belonging  to 
it,  who  shall  conceal  the  same,  and  not  deliver  a  just  and  true 
account  of  such  indebtedness,  or  not  deliver  such  property  or 
thing  in  action,  to  the  receivers,  or  one  of  them,  by  the  day  for 
that  purpose  appointed,  shall  forfeit  double  the  amount  of  such 
debt,  or  double  the  value  of  such  property  so  concealed;  which 
penalties  may  be  recovered  by  the  receivers. 

§  253.    Duty  of  receiver  to  call  creditors'  meeting. 

They  shall  call  a  general  meeting  of  the  creditors  of  such  cor- 
poration, within  four  months  from  the  time  of  their  appointment 
by   a   notice  to   be    published    in   the   same   manner,    as   herein- 


GrENERAL    CoRPOEATlON    LaW.  §§    254-257. 

before  directed  respecting  the  publication  of  tJie  notice  of  their 
appointment;  in  which  notice,  they  shall  specify  the  place  and 
time  of  such  meeting,  which  time  shall  not  be  more  than  three 
months,  nor  less  than  two  months  after  the  first  publication  of  such 
notice.  Every  such  notice  shall  be  published  at  least  once  in 
each  week,  until  the  time  of  such  meeting. 

§  254.    Proceedings  at  creditors'  meeting. 

At  such  meeting,  or  other  adjourned  meeting  thereafter,  all 
accounts  and  demands  for  and  against  such  corporation,  and  all 
its  open  and  subsisting  contracts,  shall  be  ascertained  and  adjusted 
as  far  as  may  be,  and  the  amount  of  moneys  in  the  hands  of  the 
receivers  declared. 

§  255.  Deduction  of  disbursements  and  commissions  by 
receiver. 

Out  of  the  moneys  in  their  hands  the  receivers  may  first  deduct 
all  the  necessary  disbursements  made  by  them  in  the  discharge  of 
their  duty  and  such  commissions  as  may  be  allowed  by  law. 

§  256.    Refunding  consideration  of  subsisting  contracts. 

If  there  shall  be  any  open  and  subsisting  engagements  or  con- 
tracts of  such  corporation,  which  are  in  the  nature  of  insurances 
or  contingent  engagements  of  any  kind,  the  receivers  may,  with 
the  consent  of  the  party  holding  such  engagement,  cancel  and 
discharge  the  same,  by  refunding  to  such  party  the  premium  or 
consideration  paid  thereon  by  such  corporation,  or  so  much  thereof 
as  shall  be  in  the  same  proportion  to  the  time  which  shall  remain 
of  any  risk  assumed  by  such  engagement,  as  the  whole  premium 
bore  to  the  whole  term  of  such  risk;  and  upon  such  amount  being 
paid  by  such  receivers  to  the  person  holding  or  being  the  legal 
owner  of  such  engagement,  it  shall  be  deemed  canceled  and  dis- 
charged as  against  such  receivers. 

§  257.  Retention  of  funds  for  subsisting  contracts  and 
pending  suits. 

The  receivers  shall  retain  out  of  the  moneys  in  their  hands,  a 
suiRcient  amount  to  pay  the  sums,  which  they  are  hereinbefore 


§§  258-261.         General  Corporation  Law. 

authorized  to  pay,  for  the  purpose  of  canceling  and  discharging 
any  open  or  subsisting  engagements.  If  any  suit  be  pending 
against  the  corporation  or  against  the  receivers,  for  any  demand, 
the  receivers  may  retain  the  proportion  which  would  belong  to 
such  demand  if  established,  and  the  necessary  costs  and  proceed- 
ings, in  their  hands,  to  be  applied  according  to  the  event  of  such 
suit,  or  to  be  distributed  in  a  second  or  other  dividend. 

§  258.    Payment  of  debts  not  due. 

Every  person  to  whom  a  corporation  shall  be  indebted  on  a 
valuable  consideration,  for  any  sum  of  money  not  due  at  the  time 
of  such  distribution,  but  payable  afterwards,  shall  receive  his 
proportion  with  other  creditors,  after  deducting  a  rebate  of  legal 
interest  upon  the  sum  distributed,  for  the  time  unexpired  of  such 
credit 

§  259.    Allowance  of  set-offs. 

Where  mutual  credit  has  been  given  by  any  corporation,  and 
any  other  person,  or  mutual  debts  have  subsisted  between  such  cor- 
poration and  any  other  person,  the  receivers  may  set  off  such 
credits  or  debts,  and  pay  the  proportion  or  receive  the  balance  due. 
But  no  set-off  shall  be  allowed  of  any  claim  or  debt,  which  would 
not  have  been  entitled  to  a  dividend,  as  hereinbefore  directed. 

No  set-off  shall  be  allowed  by  such  receivers,  of  any  claim  or 
debt,  which  shall  have  been  purchased  by,  or  transferred  to,  the 
person  claiming  its  allowance,  which  could  not  have  been  set  off 
by  him,  in  a  suit  brought  by  such  receivers. 

§  260.    Penalties  recovered  by  receiver. 

All  penalties  which  shall  be  recovered  by  any  receivers,  pursuant 
to  the  provisions  of  this  article,  shall  be  deemed  a  part  of  the 
property  of  the  corporation,  and  shall  be  distributed  as  such  among 
its  creditors. 

§  261.    Order  of  payment  by  receiver. 

The  receivers  shall  distribute  the  residue  of  the  moneys  in  their 
hands,  among  all  those  who  shall  have  exhibited  their  claims  as 
creditors,  and  whose  debts  shall  have  been  ascertained,  as  follows: 


General  Coepoeation  Law.         §§  262,  263. 

1.  All  debts  due  by  such  corporation  to  the  United  States,  and 
all  debts  entitled  to  a  preference  under  the  laws  of  the  United 
States, 

2.  All  debts  that  may  be  owing  by  the  corporation  as  guardian, 
executor,  administrator  or  trustee;  and  if  there  be  not  sufficient 
to  pay  all  debts  of  the  character  above  specified,  then  a  distribution 
shall  be  made  among  them,  in  proportion  to  their  amounts 
respectively. 

3.  Judgments  actually  obtained  against  such  corporation,  to 
the  extent  of  the  value  of  the  real  estate  on  which  they  shall 
respectively  be  liens. 

4.  All  other  creditors  of  such  corporation,  in  proportion  to 
their  respective  demands,  without  giving  any  preference  to  debts 
due  on  specialties. 

§  262.    Failure  to  file  claim  before  first  dividend. 

Every  creditor  who  shall  have  neglected  to  exhibit  his  demand 
before  the  first  dividend,  and  who  shall  deliver  his  account  to  the 
receivers  before  the  second  dividend,  shall  receive  the  sum  he 
would  have  been  entitled  to  on  the  first  dividend,  before  any 
distribution  be  made  to  the  other  creditors. 

§  263.    Second  dividend  by  receiver. 

If  tlie  whole  of  the  property  of  such  corporation  be  not  dis- 
tributed on  the  first  dividend,  the  receivers  shall,  within  one  year 
thereafter,  make  a  second  dividend  of  all  the  moneys  in  their 
hands,  among  the  creditors  entitled  thereto;  of  which,  and  that 
the  same  will  be  a  final  dividend,  three  weeks'  notice  shall  be 
inserted  once  in  each  week  in  a  newspaper  printed  in  the  county 
where  the  principal  place  of  business  of  such  corporation  was 
situated. 

Such  second  dividend  shall  be  made  in  all  respects  in  the  same 
manner  as  herein  prescribed  in  relation  to  the  first  dividend,  and 
no  other  shall  be  made  thereafter  among  the  creditors  of  such  cor- 
poration, except  to  the  creditors  having  suits  against  it,  or  against 
the  receivers,  pending  at  the  time  of  such  second  dividend,  and 


§§  264-267.         General  Corporation  Law. 

except  of  the  moneys  which  may  be  retained  to  pay  such  creditors, 
as  herein  provided. 

§  264.    Surplus  to  stockholders. 

If  after  the  second  dividend  is  made,  there  shall  remain  any 
surplus  in  the  hands  of  the  receivers,  they  shall  distribute  the 
same  among  the  stockholders  of  such  corporation,  in  proportion  to 
the  respective  amounts  paid  in  by  them,  severally,  on  their  shares 
of  stock. 

§  265.    Disposition  of  moneys  retained  by  receiver  for  suits. 

Wlien  any  suit  pending  at  the  time  of  the  second  dividend  shall 
be  terminated,  they  shall  apply  the  moneys  retained  in  their 
hands  for  that  purpose,  to  the  payment  of  the  amount  recovered, 
and  tbeir  necessary  charges  and  expenses;  and  if  nothing  shall 
have  been  recovered,  they  shall  distribute  such  moneys,  after 
deducting  their  expenses  and  costs,  among  the  creditors  and  stock- 
holders of  the  corporation,  in  the  same  manner  as  herein  directed 
in  respect  to  a  second  dividend. 

§  266.    Duty  of  receiver  as  to  unclaimed  dividend. 

If  any  dividend  that  shall  have  been  declared,  shall  remain  un- 
claimed by  the  person  entitled  thereto  for  one  year  after  the 
same  was  declared,  the  receivers  shall  consider  it  as  relinquished, 
and  shall  distribute  it,  on  any  subsequent  dividend,  among  the 
other  creditors. 

§  267.    Effect  of  failure  to  file  claim  before  second  dividend. 

After  such  second  dividend  shaJl  have  been  made,  the  receivers 
shall  not  be  answerable  to  any  creditor  of  such  corporation,  or  to 
any  person  having  claims  against  such  corporation,  by  virtue  of 
any  open  or  subsisting  engagement,  unless  the  demands  of  such 
creditor  shall  have  been  exhibited^  and  the  engagements  upon 
which  such  claims  are  founded,  shall  have  been  presented  to  the 
said  receivers,  in  detail  and  in  writing,  before  or  at  the  time 
specified  by  them  in  their  notice  of  a  second  dividend. 


General  Corporation  Law.         §§  26S-270. 

§  268.    Final  accounting  by  receiver. 

A  receiver  shall  apply  within  one  year  after  qualifying  as  such 
for  a  final  settlement  of  his  accounts  and  an  order  for  distribution, 
or  shall  apply  to  the  court  upon  notice  to  the  attorney-general 
for  an  extension  of  time,  setting  forth  the  reasons  why  he  is 
unable  to  close  his  accounts,  which  order  may  be  granted  in 
the  discretion  of  the  court.  The  attorney-general  or  any  cred- 
itor, or  any  party  interested,  may  apply  for  an  order  that  the 
receiver  show  cause  why  an  accounting  and  distribution  shall 
not  be  had  at  any  time  after  the  expiration  of  one  year  after 
the  receiver  qualifies;  and  it  shall  be  the  duty  of  the  attorney- 
general  after  the  expiration  of  eighteen  months  from  the  time 
the  receiver  enters  upon  his  duties,  in  case  he  has  not  applied 
for  a  final  settlement  of  his  accounts,  to  apply  for  such  an  order 
on  notice  to  such  receiver.  In  case  of  such  application  by  a 
party  other  than  the  receiver  the  court  shall  direct  the  receiver 
to  take  steps  to  account  with  all  convenient  speed.  The  receiver 
is  not  required  or  authorized  to  file  any  accoimt,  except  as  herein 
provided,  except  by  special  order  of  the  court 

§  269.    Notice  of  final  accounting. 

Previous  to  rendering  such  account  the  receivers  shall  insert  a 
notice  of  their  intention  to  present  the  same,  once  in  each  week, 
for  three  weeks,  in  a  newspaper,  of  the  county  in  which  notices  of 
dividends  are  herein  required  to  be  inserted,  specifying  the  time 
and  place  at  which  such  account  will  be  rendered.  Said  receivers 
shall  also  give  notice  to  the  sureties  on  their  official  bonds,  as  pro- 
vided in  section  two  hundred  and  twenty-seven  of  this  chapter. 

Am'd  by  L.  1909,  ch.  240. 

§  270.    Hearing  on  final  accounting. 

Upon  \he  coming  in  of  such  report,  the  court  shall  hear  the  alle- 
gations of  all  cx)ncemed  therein,  and  shall  allow  or  disallow  such 
account,  and  decree  the  same  to  be  final  and  conclusive  upon  all 
the  creditors  of  such  corporation,  upon  all  persons  who  have  claims 


§§  271-275.        General  Coepoeation  Law. 

against  it,  upon  any  open  or  subsisting  engagement,  and  upon  all 
the  stockholders  of  such  corporation. 

§  271.    Reference  of  final  account. 

The  referee  to  whom  such  account  shall  be  referred,  shall  hear 
and  examine  the  proofs,  vouchers  and  documents  offered  for  or 
against  such  account,  and  shall  report  thereon  fully  to  the  court 

§  272.    Further  accounting. 

Such  receivers  shall  also  account  from  time  to  time  in  the  same 
manner,  and  with  the  like  effect,  for  all  moneys  which  shall  come 
to  their  hands  after  the  rendering  of  such  account,  and  for  all 
moneys  which  shall  have  been  retained  by  them  for  any  of  the 
purposes  hereinbefore  specified,  and  shall  pay  into  court  all 
unclaimed  dividends. 

§  273.    Removal  of  receiver. 

Such  receivers  may  be  removed  by  the  court. 

§  274.    Vacancy. 

Any  vacancy  created  by  removal,  death  or  otherwise,  may  be 
supplied  by  the  court. 

§  275.    Renunciation  by  receiver. 

Any  receiver  who  shall  be  desirous  of  renouncing  the  trust 
vested  in  him,  may  apply  to  the  court  from  whom  his  appointment 
was  received,  for  an  order  to  all  persons  interested,  to  show  cause 
why  such  renunciation  should  not  be  accepted. 

Such  application  shall  be  accompanied  by  a  full,  true  and  just 
account  of  all  the  transactions  of  such  receiver,  and  particularly 
of  the  property,  moneys  and  effects  received  by  him;  of  all  pay- 
ments made,  whether  to  creditors  or  otherwise ;  and  of  the  remain- 
ing effects  and  property  of  the  corporation,  in  respect  to  which 
he  was  appointed  receiver,  within  his  knowledge,  and  the  situation 
of  the  same. 


General  Corporation  Law.  §  276. 

To  such  account  shall  be  annexed  the  affidavit  of  the  receiver, 
that  the  said  account  is  in  all  respects  just  and  true,  according 
to  the  best  of  his  knowledge  and  belief;  which  affidavit  shall  be 
subscribed  and  sworn  to,  before  the  court,  to  whom  the  application 
is  made,  and  shall  be  certified  by  the  clerk  of  the  court. 

Such  court,  shall  thereupon  grant  an  order,  directing  notice 
to  be  given  to  all  persons  interested  in  the  property  of  the  cor- 
poration, in  respect  to  which  such  receiver  was  appointed,  to  show 
cause  on  a  day  or  at  a  term  and  at  a  place  therein  to  be  specified, 
why  he  should  not  be  permitted  to  renounce  his  appointment. 

Such  notice  shall  be  published,  once  in  each  week,  for  six  weeks 
successively  in  such  newspapers,  as  such  court  shall  direct. 

On  the  day  appointed  for  such  hearing,  and  on  such  other  days 
as  shall  from  time  to  time  be  appointed,  if  it  shall  appear  that 
notice  was  duly  published,  the  court  shall  proceed  to  hear  the 
proofs  and  allegations  of  the  parties. 

If  it  shall  appear  that  the  proceedings  of  such  receiver,  in 
relation  to  his  trust,  have  been  fair  and  honest,  and  particularly 
in  the  collection  of  the  property  and  debts  vested  in  him;  and 
if  such  court  be  satisfied  that  for  any  reason  it  is  inexpedient 
for  such  receiver  to  continue  in  the  execution  of  the  duties  of  his 
appointment,  and  that  such  duties  can  be  exec?ited  by  another 
receiver,  without  injury  to  the  property  of  the  corporation,  or  to 
the  creditors;  and  if  no  good  cause  to  the  contrary  appear,  such 
court  shall  grant  an  order,  allowing  such  receiver  to  renounce  his 
appointment. 

Upon  such  order  being  granted,  such  receiver  shall  be  dis- 
charged from  the  trust  reposed  in  him,  and  his  power  and  au- 
thority shall  thereupon  cease;  but  he  shall,  notwithstanding,  re- 
main subject  to  any  liability  he  may  have  incurred,  at  any  time 
previous  to  the  granting  of  such  order,  in  the  management  of  his 
trust. 

The  expense  of  all  proceedings  in  effecting  such  renunciation 
Rhall  be  paid  by  the  receiver  making  the  application. 

§  276.    Control  of  receiver  by  court. 

The  receivers  shall  be  subject  to  the  control  of  the  court  and 
may  be  compelled  to  accoimt  at  any  time. 


§§  2Y7,  278-        General  Corpokation  Law. 

§  277.  Commissions  and  expenses  of  receiver  in  voluntary 
dissolution. 

A  receiver  appointed  pursuant  to  article  nine  is  entitled,  in 
addition  to  his  necessary  expenses,  to  commissions  upon  the  sums 
received  and  disbursed  by  him  as  the  court  by  which  or  the  judge 
by  whom  he  is  appointed  allows,  as  follows:  On  the  first  twenty 
thousand  dollars  riot  exceeding  five  per  centum ;  on  the  next  eighty 
thousand  dollars,  not  exceeding  two  and  one-half  per  centum ;  and 
on  the  remainder,  not  exceeding  one  per  centum ;  but  in  case  the 
commissions  of  a  receiver  so  computed  shall  not  amount  to  one 
hundred  dollars,  said  court  or  judge  may  in  his  or  its  discretion 
allow  said  receiver  such  a  sum  not  exceeding  one  hundred  dollars 
for  his  commissions  as  shall  be  commensurate  with  the  services 
rendered  by  said  receiver. 

§  278.  Commissions  and  expenses  of  receiver  except  in 
voluntary  dissolution. 

A  receiver  of  a  corporation,  except  a  receiver  appointed  in  pro- 
oeedings  for  its  voluntary  dissolution,  is  entitled,  in  addition  to 
his  necessary  expenses,  to  such  commissions,  not  exceeding  two 
and  one-half  per  centum  upon  the  sums  received  and  disbursed  by 
him,  as  the  court  by  which  or  the  judge  by  whom  he  is  appointed 
allows,  but  except  upon  a  final  accounting  such  a  receiver  shall 
not  receive  on  account  of  his  services  for  any  one  year  a  greater 
amount  than  twelve  thousand  dollars,  nor  for  any  period  less  than 
a  year  more  than  at  that  rate.  Upon  final  accounting,  the  court 
may  make  an  additional  allowance  to  such  receiver,  not  exceeding 
two  and  one-half  per  centum  upon  the  sums  received  and  disbursed 
by  him,  if  the  court  is  satisfied  that  he  has  performed  services  that 
fairly  entitle  him  to  such  additional  allowance.  Where  more  than 
one  receiver  shall  be  appointed,  the  compersation  herein  provided 
shall  be  divided  between  said  receivers. 


General  Corporation  Law.  §  300. 


ABTICLE  12. 

Provisions  Applicable  to  Two  or  More  of  the  Foreooino 
Proceedings  or  Actions. 

Section  300.    Application  of  preceding  articles  to  certain  corporations. 

301.  Officers  and   agents   may   be   compelled   to  testify   in   certain 

actions. 

302.  Injunction  staying  actions  by  creditors  in  certain  axytions. 

303.  Creditors   of  corporation  may  be  brought  in  to   prove   their 

claims  in  certain  actions. 

304.  When  attorney -general  must  bring  certain  actions. 

305.  Requisites  of  injunction  against  corporations  in  certain  cases. 

306.  Appointment  of  receivers    of  property   of  corporations. 

307.  Judicial  suspension  or  removal  of  officer  of  corporation. 

308.  Application  of  the  last  three  sections. 

309.  Misnomer  not  available  in  action  against  stockholder. 

310.  Appraisal  of  property  of  insolvent  corporation. 

311.  Application  by  attorney-general  for  removal  of  receiver  and  to 

facilitate  closing   affairs   of   receivership. 

312.  Service  of  papers  upon  attorney-generai. 

313.  Designation    of    depositories    of    funds    in    order    appointing 

receiver. 

314.  Application  to  the  court  in  certain  actions  and  proceedings. 

315.  County  vrherein  action  may  be  brought  by   attorney-general 

on  behalf  of  the  people. 

316.  Preferences  in  actions  *of  proceedings  by  or  against  receivers. 

§  300.  Application  of  preceding  articles  to  certain 
corporations. 

Articles  fifth,  sixth  or  seventh  of  this  chapter  do  not  apply  to 
a  religious  corporation ;  or  to  a  municipal  or  other  political  corpo- 
ration, created  by  the  constitution,  or  by  or  under  the  laws  of  this 
state;  or  to  any  corporation  which  the  regents  of  the  university 
have  power  to  dissolve,  except  upon  the  application  of  the  regents, 
or  of  the  trustees  of  such  a  corporation ;  and  in  aid  of  its  liquida- 
tion under  such  dissolution. 

*  So  in  original. 


§§  301-303.        General  Corporation  Law. 

§  301.  Officers  and  agents  may  be  compelled  to  testify  in 
certain  actions. 

In  an  action,  brought  as  prescribed  in  article  fifth,  sixth  or 
seventh,  a  stockholder,  officer,  alienee,  or  agent  of  a  corporation, 
is  not  excused  from  answering  a  question,  relating  to  the  manage- 
ment of  the  corporation,  or  the  transfer  or  disposition  of  its  prop- 
erty, on  the  ground  that  his  answer  may  expose  the  corporation  to 
a  forfeiture  of  any  of  its  corporate  rights,  or  will  tend  to  convict 
him  of  a  criminal  offense,  or  to  subject  him  to  a  penalty  or  for- 
feiture. But  his  testimony  shall  not  be  used,  as  evidence  against 
him,  in  a  criminal  action  or  special  proceeding. 

§  302.  Injunction  staying  actions  by  creditors  in  certain 
actions. 

In  such  an  action,  the  court  may,  in  its  discretion,  on  the  appli- 
cation of  either  party,  at  any  stage  of  the  action,  before  or  after 
final  judgment,  and  with  or  without  security,  grant  an  injunction 
order,  restraining  the  creditors  of  the  corporation  from  bringing 
actions  against  the  defendants,  or  any  of  them,  for  the  recovery  of 
a  sum  of  money,  or  from  taking  any  further  proceedings  in  such 
actions,  theretofore  commenced.  Such  an  injunction  has  the 
same  effect,  and,  except  as  otherwise  expressly  prescribed  in  this 
section,  is  subject  to  the  same  provisions  of  law,  as  if  each  creditor, 
upon  whom  it  is  served,  was  named  therein,  and  was  a  party  to 
the  action  in  which  it  is  granted. 

§  303.  Creditors  of  corporation  may  be  brought  in  to  prove 
their  claims  in  certain  actions. 

In  such  an  action,  the  court  may,  at  any  stage  of  the  action, 
before  or  after  final  judgment,  make  an  order  requiring  all  the 
creditors  of  the  coi'poration  to  exhibit  and  prove  their  claims,  and 
thereby  make  themselves  parties  to  the  action,  in  such  a  manner, 
and  in  such  a  reasonable  time,  not  less  than  six  months  from  the 
fti'st  publication  of  notice  of  the  order  as  the  court  directs;  and 
rjiiit  the  creditors,  who  make  default  in  so  doing,  shall  be  pre- 


General  Corporation  Law.         §§  304,  305. 

eluded  from  all  benefit  of  the  judgment,  and  from  any  distribu- 
tion which  may  be  made  thereunder,  except  as  hereinafter  pro- 
vided. Notice  of  the  order  must  be  given  by  publication,  in  such 
newspapers,  and  for  such  a  length  of  time,  as  the  court  directs. 
Notwithstanding  such  order  any  such  creditor  who  shall  exhibit 
and  prove  his  claim  in  the  manner  directed  thereby,  with  proof, 
by  aifidavit  or  otherwise,  that  he  has  had  no  notice  or  knowledge 
thereof  in  time  to  comply  therewith,  any  time  before  an  order  is 
made  directing  a  final  distribution  of  the  assets  of  such  corporation, 
shall  be  entitled  to  have  his  claim  received,  and  shall  have  the 
same  rights  and  benefits  thereon,  so  far  as  the  assets  of  such  cor- 
poration then  remaining  undistributed  may  render  possible,  as  if 
his  claim  had  been  exhibited  and  proved  within  the  time  limited 
by  such  order. 

§  304.    When  attorney-general  must  bring  certain  actions. 

Where  the  attorney-general  has  good  reason  to  believe,  that  an 
action  can  be  maintained  in  behalf  of  the  people  of  the  state,  as 
prescribed  in  articles  fifth,  sixth  or  seventh  of  the  chapter,  except 
section  one  hundred  and  thirty  of  this  chapter,  he  must  bring 
an  action  accordingly,  or  apply  to  a  competent  court  for  leave  to 
bring  an  action,  as  the  case  requires ;  if,  in  his  opinion,  the  public 
interests  require  that  an  action  should  be  brought.  In  a  case 
where  the  action  can  be  brought  only  by  the  attorney-general  in 
behalf  of  the  people,  if  a  creditor,  stockholder,  director,  or  trustee 
of  the  corporation,  applies  to  the  attorney-general  for  that  purpose, 
and  furnishes  the  security  required  by  law,  the  attorney-general 
must  bring  the  action,  or  apply  for  leave  to  bring  it,  if  he  has 
good  reason  to  believe,  that  it  can  be  maintained.  Where  such  an 
application  is  made  section  nineteen  hundred  and  eighty-six  of  the 
code  of  civil  procedure  applies  thereto,  and  to  the  action  brought 
in  pursuance  thereof. 

§  305.  Requisites  of  injunction  against  corporations  in  cer- 
tain cases« 

An  injunction  order,  suspending  the  general  and  ordinary  busi- 
aess  of  a  corporation,  or  suspending  from  office,  or  restraining 


§  306.  General  Coeporation  Law. 

from  the  performance  of  his  duties,  a  trustee,  director,  or  other 
officer  thereof,  can  be  granted  only  by  the  court,  upon  notice  of 
the  application  therefor,  to  the  proper  officer  of  the  corporation,  or 
to  the  trustee,  director,  or  other  officer  enjoined.  If  such  an 
injunction  order  is  made,  otherwise  than  as  prescribed  in  this 
section,  it  is  void. 

§  306.    Appointment  of  receivers  of  property  of  corporations. 

A  receiver  of  the  property  of  a  corporation  can  be  appointed 
only  by  the  court,  and  in  one  of  the  following  cases : 

1.  An  action,  brought  as  prescribed  in  articles  fifth,  sixth  or 
seventh  of  this  chapter. 

2.  An  action  brought  for  the  foreclosure  of  a  mortgage  upon 
the  property,  of  which  the  receiver  is  appointed,  where  the  mortr 
gage  debt,  or  the  interest  thereupon,  has  remained  unpaid,  at 
least  thirty  days  after  it  was  payable,  and  after  payment  thereof 
was  duly  demanded  of  the  proper  officer  of  the  corporation  and 
where  either  the  income  of  the  property  is  specifically  mortgaged, 
or  the  property  itself  is  probably  insufficient  to  pay  the  mortgage 
debt. 

3.  An  action  brought  by  the  attorney-general,  or  by  a  stock- 
holder, to  preserve  the  assets  of  a  corporation,  having  no  officer 
empowered  to  hold  the  same. 

4.  A  special  proceeding  for  the  voluntary   dissolution  of  a 

corporation. 

5.  Upon  the  application  of  the  regents  of  the  university,  in  aid 
of  the  liquidation  of  a  corporation  whose  dissolution  they  con- 
template or  have  decreed ;  or  upon  the  application  of  the  trustees 
of  such  a  corporation,  with  notice  to  the  regents. 

Where  the  receiver  is  appointed  in  an  action,  otherwise  than 
by  or  pursuant  to  a  final  judgment,  notice  of  the  application  for 
his  appointment  must  be  given  to  the  proper  officer  of  the 
corporation. 


Genekal  Corpoeation  Law.        §§  307-310. 

§  307,  Judicial  suspension  or  removal  of  officer  of 
corporation. 

A  trustee,  director,  or  other  officer  of  a  corporation  shall  not 
be  suspended  or  removed  from  office,  by  a  court  or  judge,  otherwise 
than  by  tlie  final  judgment  of  a  competent  court,  in  an  action 
brought  by  the  attorney-general,  as  prescribed  in  section  ninety 
of  this  chapter. 

§  308.    Application  of  the  last  three  sections. 

The  last  three  sections  apply  to  an  action  or  special  proceeding, 
against  a  corporation  created  by  or  under  the  laws  of  the  state,  or 
a  trustee,  director,  or  other  officer  thereof ;  or  against  a  corporation 
created  by  or  under  the  laws  of  another  state,  government,  or 
country,  or  a  trustee,  director,  or  other  officer  thereof,  where  the 
corporation  does  business  within  the  state,  or  has,  within  the  state, 
a  business  agency  or  a  fiscal  agency,  or  an  agency  for  the  transfer 
of  its  stock. 

§  309.  Misnomer  not  available  in  action  against  stock- 
holder. 

Where  an  action,  authorized  by  a  law  of  the  state,  is  brought 
against  one  or  more  persons,  as  stockholders  of  a  corporation,  an 
objection  to  any  of  the  proceedings  can  not  be  taken,  by  a  person 
properly  made  a  defendant  in  the  action  on  the  ground  that  the 
plaintiff  has  joined  with  him,  as  a  defendant  in  the  action,  a 
person,  whose  name  appears  on  the  stock-books  of  the  corporation, 
as  a  stockholder  thereof,  by  the  name  so  appearing;  but  who  is 
misnamed,  or  dead,  or  is  not  liable  for  any  cause.  In  such  a  case, 
the  court  may,  at  any  time  before  final  judgment,  upon  motion  of 
either  party,  amend  the  pleadings  and  other  papers,  without  preju- 
dice to  the  previous  proceedings,  by  substituting  the  true  name 
of  the  person  intended,  or  by  striking  out  the  name  of  the  person 
who  is  dead,  or  not  liable,  and,  in  a  proper  case,  inserting  the  name 
of  his  representative  or  successor. 

§  310.    Appraisal  of  property  of  insolvent  corporation. 

Whenever  by  reason  of  the  provisions  of  any  law  of  this  state 
it  shall  become  necessary  to  appraise  in  whole  or  in  part  the 


§§  311,  312.        Genekal  Coepoeation  Law. 

property  of  any  corporation  in  the  kands  of  a  receiver  or  other- 
wise, the  persons  whose  duty  it  shall  be  to  make  such  appraisal 
shall  value  the  real  estate  at  its  full  and  true  value,  taking  into 
consideration  actual  sales  of  neighboring  real  estate  similarly 
situated  during  the  year  immediately  preceding  the  date  of  such 
appraisal,  if  any;  and  they  shall  value  all  such  property,  stocks, 
bonds  or  securities  as  are  customarily  bought  or  sold  in  open 
markets  in  the  city  of  New  York  or  elsewhere,  for  the  day  on 
\\hich  such  appraisal  or  report  may  be  required,  by  ascertaining 
the  range  of  the  market  and  the  average  of  prices  as  thus  found, 
running  through  a  reasonable  period  of  time. 

§  311.  Application  by  attorney-general  for  removal  of  re- 
ceiver and  to  facilitate  closing  affairs  of  receivership. 

The  attorney-general  may,  at  any  time  he  deems  that  the  inter- 
ests of  the  stockholders,  creditors,  policy-holders,  depositors  or 
other  beneficiaries  interested  in  the  proper  and  speedy  distribution 
of  the  assets  of  any  insolvent  corporation  will  be  subserved  thereby, 
mal^e  a  motion  in  the  supreme  court  at  a  special  term  thereof,  in 
any  judicial  district : 

1.  For  an  order  removing  the  receiver  of  any  insolvent  corpo- 
ration and  appointing  a  receiver  tJiereof  in  his  stead,  or, 

2.  To  compel  him  to  account,  or, 

3.  For  such  other  and  additional  order  or  orders  as  to  him 
may  seem  proper  to  facilitate  the  closing  up  of  the  affairs  of  such 
receivership,  and 

Any  appeal  from  any  order  made  upon  any  motion  under  this 
section  shall  be  to  the  appellate  division  of  the  department  in 
which  such  motion  is  made. 

§  312.    Service  of  papers  upon  attorney-general. 

A  copy  of  all  motions  and  all  motion  papers,  and  a  copy  of  any 
other  application  to  the  court,  together  with  a  copy  of  the  order  or 
judgment  to  be  proposed  thereon  to  the  court,  in  every  action  or 
proceeding  for  the  dissolution  of  a  corporation  or  a  distribution 
of  its  assets,  shall,  in  all  cases,  be  served  on  the  attorney-general, 


'  Geneeal  Coepoeation  Law.         §§  313-315. 

in  the  same  manner  as  provided  by  law  for  the  service  of  papers 
on  attorneys  who  have  appeared  in  actions,  whether  the  applica- 
tions bnt  for  this  section  would  be  ex  parte  or  upon  notice,  and 
no  order  or  judgment  granted  shall  vary  in  any  material  respect 
from  the  relief  specified  in  such  copy,  order  or  judgment,  unless, 
the  attorney-general  shall  appear  on  the  return  day  and  shall  have 
been  heard  in  relation  thereto ;  and  any  order  or  judgment  granted 
in  any  action  or  proceeding  aforesaid,  without  such  service  of 
such  papers  upon  the  attorney-general,  shall  be  void,  and  no 
receiver  of  any  such  corporation  shall  pay  to  any  person  any  money 
directed  to  be  paid  by  any  order  or  judgment  made  in  any  such 
action  or  proceeding,  until  the  expiration  of  eight  days  after  a 
certified  copy  of  such  order  or  judgment  shall  have  been  served  as 
aforesaid  upon  the  attorney-general. 

§  313.  Designation  of  depositories  of  funds  in  order  ap- 
pointing receiver. 

All  orders  appointing  receivers  of  corporations  shall  designate 
therein  one  or  more  places  of  deposit,  wherein  all  funds  of  the 
corporation  not  needed  for  immediate  disbursement  shall  be 
deposited  and  no  deposits  or  investments  of  such  trust  funds  shall 
be  made  elsewhere,  except  upon  the  order  of  the  court  upon  due 
notice  given  to  the  attorney-general. 

§  314.  Application  to  the  court  in  certain  actions  and  pro- 
ceedings. 

All  applications  to  the  court  shall  be  made  in  the  judicial  district 
where  the  principal  ofiice  of  the  corporation  against  which  pro- 
ceedings are  taken  is  located,  excepting  such  applications  as  are 
made  in  actions  brought  by  the  attorney-general  on  behalf  of  the 
people  of  the  state,  and  all  such  applications  shall  be  made  in 
the  judicial  district  in  which  the  action  is  triable. 

§  315.  County  wherein  action  may  be  brought  by  attorney- 
general  on  behalf  of  the  people. 

An  action  or  proceeding  brought  by  the  attorney-general  on 
behalf  of  the  people  of  the  state  against  any  corporation  for  the 


§§  316-321.         Gejnehal  Cokpokation  Law. 

purpose  of  procuring  its  dissolution,  the  appointment  of  a  receiver, 
or  the  sequestration  of  its  property,  may  be  brought  in  any  county 
of  the  state,  to  be  designated  by  the  attorney-general. 

§  316.  Preferences  in  actions  or  proceedings  by  or  against 
receivers. 

All  actions  or  other  legal  proceedings  and  appeals  therefrom  or 
therein  brought  by  or  against  a  receiver  of  any  of  the  insolvent 
corporations  referred  to  in  this  chapter,  shall  have  a  preference 
upon  the  calendars  of  all  courts  next  in  order  to  actions  or  proceed- 
ings brought  by  the  people  of  the  state  of  New  York. 


AETICLE  13. 

Alteration  and  Kepeal  of  Charter  of  Corporation. 

Section  320.    Alteration  and  repeal  of  oharter.  ,1 

321.     Conflicting  corporate  laws. 

§  320.    Alteration  and  repeal  of  charter. 

The  charter  of  every  corporation  shall  bo  subject  to  alteration, 
suspension  and  repeal,  in  the  discretion  of  the  legislature. 

§  321.    Conflicting  corporate  laws. 

If  in  any  corporate  law  there  is  or  shall  be  any  provision  in  con- 
flict with  any  provisions  of  this  chapter  or  of  the  stock  corporation 
law,  the  provisions  so  conflicting  shall  prevail,  and  the  provision 
of  this  chapter  or  of  the  stock  corporation  law  with  which  it  con- 
flicts shall  not  apply  in  such  a  case.  If  in  any  such  law  there  is 
or  shall  be  a  provision  relating  to  a  matter  embraced  in  this  chap- 
ter or  in  the  stock  corporation  law,  but  not  in  conflict  with  it,  such 
provision  in  such  other  law  shall  be  deemed  to  be  in  addition  to  the 
provision  in  this  chapter  or  in  the  stock  corporation  law  relating 
to  the  same  subject-matter,  and  both  provisions  shall,  in  such  case, 
be  applicable. 


General  Cokpoeation  Law.         §§  330-332. 


ARTICLE  14. 

Laws  Repealed;  Consteuction ;  When  to  Take  Effect. 

Section  330.    Laws  repealed. 

331.  Construction. 

332.  When  to  take  effect. 

§  330.    Laws  repealed. 

Of  the  laws  enumerated  in  the  schedule  hereto  annexed,  that 
f)ortion  specified  in  the  last  column  is  hereby  repealed. 

§  331.    Construction. 

Nothing  in  this  chapter  shall  be  construed  to  impair  any  right 
or  liability  which  any  existing  corporation,  its  officers,  directors, 
stockholders  or  creditors  may  have  or  be  subject  to  or  which  any 
subject  to  on  the  date  when  this  chapter  takes  effect,  by  virtue  of 
any  special  act  of  the  legislature  creating  such  corporation  or 
creating  or  defining  any  such  right  or  liability,  unless  such  special 
act  is  repealed  by  this  chapter  or  the  other  general  laws  herein- 
bt^fore  mentioned. 

§  332.    When  to  take  effect. 

This  chapter  shall  take  effect  immediately. 


STOCK    CORPORATION    LAW, 


CHAPTER  6i  of  1903. 

Chapter  69  of  the  Consolidated  Laws. 

Article      I.  Short  title  (§1). 

2.  General  provisions  (§§  5-18). 

3.  Directors  and  officers  (§§  25-35). 

4.  Stock  and  stockholders  (§§  50-70). 

5.  Law0  repealed;  when  to  take  effect  (§§  80,  81) 

AETICLE  1. 

Short  Title. 
Section    1.    Short  title. 

§  1.    Short  title. 

This  chapter  shall  be  known  as  the  "  Stock  Corporation  Law." 

AKTICLE  2. 

General  Provisions. 

Section    5.  Application  of  article. 

6.  Power  to  Dorrow  money  and  mortgage  property. 

7.  Validating  corporate  mortgages. 

8.  Power  to  guarantee  bonds  of  other  corporations. 

9.  •Reorganization  upon  sale  of  corporate  property. 

10.  Contents  of  plan  or  agreement. 

11.  Sale    of    property;    possession    of    receiver    and    suits    against 

him. 

12.  Municipalities  may  assent  to  plan  of  readjustment. 

13.  Change  of  place  of  business. 

14.  Combinations  prohibited. 

15.  Merger. 

16.  Voluntary  sale  of  franchise  and  property. 

17.  Rights    of    non-consenting    stockholders    on    voluntary    sale    of 

franchise  and   prop^'rty. 

18.  Alterations  or  extension  of  business. 

19.  Issuance  of  sihares  of  stock  without  nominal  or  par  value. 

20.  Commencement  of  business;  authorized  debts. 

21.  Taxation. 

22.  Increase  or  reduction  of  sihares  or  capital. 

23.  Amount  of  capital  stock  and  of  shares  within  meaning  of  other 

laws. 

•  So  in  original. 


Stock  Corporation  Law.  §§  5,  6. 

§  5.    Application  of  article. 

This  article  except  sections  eight,  fifteen,  sixteen,  seventeen  and 
eighteen  thereof,  shall  not  apply  to  moneyed  corporations. 

§  6.    Power  to  borrow  money  and  mortgage  property. 

In  addition  to  the  powers  conferred  by  the  general  corporation 
law,  every  stock  corporation  shall  have  the  power  to  borrow  money 
and  contract  debts,  when  necessary  for  the  transaction  of  its  busi- 
ness, or  for  the  exercise  of  its  corporate  rights,  privileges  or  fran- 
chises, or  for  any  other  lawful  purpose  of  its  incorporation;  and 
it  may  issue  and  dispose  of  its  obligations  for  any  amount  so 
borrowed,  and  may  mortgage  its  property  and  franchises  to  secure 
the  payment  of  such  obligations,  or  of  any  debt  contracted  for  said 
purposes.  Every  such  mortgage,  except  purchase-money  mort- 
gages and  mortgages  authorized  by  contracts  made  prior  to  May 
first,  eighteen  hundred  and  ninety-one,  shall  be  consented  to  by  the 
holders  of  not  less  than  two-thirds  of  the  capital  stock  of  the  corpo- 
ration, which  consent  shall  be  given  either  in  ^vriting  or  by  vote 
at  a  special  meeting  of  the  stockholders  called  for  that  purpose, 
upon  the  same  notice  as  that  required  for  the  annual  meetings 
of  the  corporation ;  and  a  certificate  under  the  seal  of  the  corpo- 
ration that  such  consent  was  given  by  the  stockholders  in  writing, 
or  that  it  was  given  by  vote  at  a  meeting  as  aforesaid,  shall 
be  subscribed  and  acknowledged  by  the  president  or  a  vice- 
president  and  by  the  secretary  or  an  assistant  secretary,  of  the 
corporation,  and  shall  be  filed  and  recorded  in  the  office  of  the 
clerk  or  register  of  the  county  wherein  the  corporation  has  its 
principal  place  of  business.  When  authorized  by  like  consent,  the 
directors  under  such  regulations  as  they  may  adopt,  may  confer 
on  the  holder  of  any  debt  or  obligation,  whether  secured  or 
unsecured,  evidenced  by  bonds  of  the  corporation,  the  right  to 
convert  the  principal  thereof,  after  two  and  not  more  than  twelve 
years  from  the  date  of  such  bonds,  into  stock  of  the  corporation; 
and  if  the  capital  stock  shall  not  be  sufficient  to  meet  the  conversion 
when  made,  the  directors  shall  from  time  to  time,  authorize  an 
increase  of  capital  stock  sufficient  for  that  purpose  by  causing  to 
be  filed  in  the  office  of  the  secretary  of  state,  and  a  duplicate 


§  7.  Stock  Corporation  Law. 

thereof  in  the  office  of  the  clerk  of  the  county  where  the  principal 
place  of  business  of  the  corporation  shall  be  located,  a  certificate 
under  the  seal  of  the  corporation,  subscribed  and  acknowledged  by 
the  president  and  secretary  of  the  corporation  setting  forth, 

1.  A  copy  of  such  mortgage;  or  resolution  of  directors  author- 
izing the  issue  of  such  bonds ; 

2.  That  the  holders  of  not  less  than  two-thirds  of  the  capital 
stock  of  the  corporation  duly  consented  to  the  execution  of  such 
niortgage_or  resolution  of  directors  authorizing  the  issue  of  such 
bonds  by  such  corporation ; 

8.  A  copy  of  the  resolution  of  the  directors  of  the  corporation 
authorizing  the  increase  of  the  capital  stock  of  the  corporation 
necessary  for  the  purpose  of  such  conversion; 

4.  The  amount  of  capital  theretofore  authorized,  the  propor- 
tion  thereof  actually  issued  and  the  amount  of  the  increased 
capital  stock. 

Tf  the  corporation  be  a  railroad  corporation  the  certificate  shall 
have  indorsed  thereon  the  approval  of  the  public  service  commis- 
sion having  jurisdiction  thereof.  When  the  certificate  herein 
provided  for  has  been  filed,  the  capital  stock  of  such  corporation 
shall  be  increased  to  the  amount  specified  in  such  certificate. 

§  7.    Validating  corporate  mortgages. 

'V\nienever  any  mortgage  affecting  property  or  franchises  within 
this  state  heretofore  or  hereafter  executed  by  authority  of  the  boanl 
of  directors  in  behalf  of  any  stock  corporation,  domestic  or  foreign, 
of  any  description,  recites  or  represents  in  substance  or  effect  that 
the  execution  of  such  mortgage  has  been  duly  consented  to,  or 
authorized  by  stockholders,  such  recital  or  representation  in  any 
such  mortgage,  after  r>ublic  record  thereof  within  this  stat^,  shall 
be  presumptive  evidence  that  the  execution  of  such  mortgage  has 
been  duly  and  sufficiently  consented  to,  and  authorized  by  stock- 
holders as  required  by  any  provision  of  law.  After  any  such 
mortgage  heretofore  or  hereafter  shall  have  been  publicly  recorded 
for  more  than  one  year  in  one  or  more  of  the  counties  of  this  state 
containing  the  mortgaged  premises  or  any  part  thereof,  and  the 
corporation  shall  have  received  value  for  bonds  actually  issued 


Stock  Corpoeation  Law.  §  7. 

under  and  secured  by  such  mortgage,  and  interest  shall  have  been 
paid  on  any  of  such  bonds  according  to  the  terms  thereof,  such 
recital  or  representation  of  such  mortgage  so  recorded  shall  be 
conclusive  evidence  that  the  execution  of  such  mortgage  has  been 
duly  and  sufficiently  consented  to,  and  authorized  by  stocldiolders 
as  required  by  any  provision  of  law,  and  its  validity  shall  not  be 
impaired  by  reason  of  any  defect  or  insufficiency  of  consent  or 
authority  of  stockholders  or  in  filing  or  recording  such  consent  or 
authority,  and  such  mortgage  shall  be  valid  and  binding  upon  the 
corporation,  and  those  claiming  under  it,  as  security  for  all  valid 
bonds  issued  or  to  be  issued  thereunder,  unless  such  mortgage  shall 
be  adjudged  invalid  in  an  action  begun  as  hereinafter,  in  this  sec- 
tion, provided.  Notwithstanding  the  foregoing  provisions  of  this 
section,  the  invalidity  of  any  such  mortgage  heretofore  recorded 
because  of  insufficiency  of  consent  by  stockholders  may  be  adjudged 
in  any  action  for  such  purpose  begun  before  the  first  day  of 
April,  nineteen  hundred  and  two,  and  the  invalidity  of  any  such 
mortgage  hereafter  recorded,  because  of  insufficiency  of  consent 
by  stockholders,  may  be  adjudged  in  any  action  for  such  purpose 
begun,  within  one  year  after  the  earliest  record  of  such  mortgage 
in  any  county  in  this  state,  provided  in  either  case  that  such  action 
shall  have  been  so  begun  by  or  in  behalf  of  the  corporation  by 
direction  of  the  board  of  directors  acting  in  their  own  discretion, 
or  upon  the  written  request  of  the  holders  of  not  less  than  one- 
third  of  the  capital  stock  of  the  corporation;  and  in  any  such 
action  so  begun  by  or  in  behalf  of  the  corporation,  the  recitals  or 
representations  of  the  mortgage  shall  be  presumptive  evidence  only 
as  first  above  provided.  Whenever  hereafter,  in  compliance  with 
any  law  of  this  state,  the  officers  of  any  corporation  shall  have 
made  and  filed  and  recorded  a  certificate  that  the  execution  of  a 
mortgage  hereafter  made  by  the  corporation  has  been  duly  con- 
sented to  by  stockholders,  such  certificate  shall  be  conclusive 
evidence  as  to  the  truth  thereof,  in  favor  of  any  and  all  persons 
who  in  good  faith  shall  receive  or  purchase,  for  value,  any  bond 
or  obligation  purporting  to  be  secured  by  such  mortgage,  at  any 
time  when  said  certificate  shall  remain  of  record  and  uncanceled). 
Nothing  in  this  section  contained  shall  affect  any  right  or  any 


§§  8,  9.  Stock  Corporation  Law. 

remedy  in  respect  of  any  such  right  of  any  creditor  accrued 
before  this  enactment  nor  shall  it  dispense  with  the  necessity  of 
obtaining  the  consent  of  the  public  service  commission  having 
jurisdiction  thereof  to  any  mortgage  by  a  railroad  corporation. 

§  8.    Power  to  guarantee  bonds  of  other  corporations. 

Any  stock  corporation  may,  in  pursuance  of  a  unanimous  vote 
of  its  stockholders  voting  at  a  special  meeting  called  for  that  pur- 
pose by  notice  in  writing  signed  by  a  majority  of  the  directors 
of  such  corporation  stating  the  time  and  place  and  object  of  the 
meeting  and  served  upon  each  stockholder  appearing  as  such 
upon  the  books  of  the  corporation,  personally  or  by  mail  at  his 
kist-known  post-office  address  at  least  sixty  days  prior  to  such 
meeting,  guarantee  the  bonds  of  any  other  domestic  corporation 
engaged  in  the  same  general  line  of  business;  and  any  stock  cor- 
poration owning  the  entire  capital  stock  of  any  other  domestic 
stock  corporation  engaged  in  the  same  general  line  of  business  may 
in  pursuance  of  a  two-thirds  vote  of  its  stockholders  voting  at  a 
special  meeting  called  for  that  purpose  by  notice  in  writing 
signed  by  a  majority  of  the  directors  of  such  corporation,  stating 
the  time  and  place  and  object  of  the  meeting  and  served  upon 
each  stockholder  appearing  as  such  upon  the  books  of  the  corpora- 
tion personally,  or  by  mail,  at  his  last-known  post-office  address, 
at  least  sixty  days  prior  to  such  meeting,  guarantee  the  bonds  of 
such  other  corporation. 

§  9.  Reorganization  upon  sale  of  corporate  property  and 
franchises. 

When  the  property  and  franchises  of  any  domestic  stock  cor- 
poration shall  be  sold  by  virtue  of  a  mortgage  or  deed  of  trust,  duly 
executed  by  it,  or  pursuant  to  the  judgment  or  decree  of  a  court  of 
competent  jurisdiction,  or  by  virtue  of  any  execution  issued 
thereon,  and  the  purchaser,  his  assignee  or  grantee  shall  have 
acquired  title  to  the  same  in  the  manner  prescribed  by  law,  he 
may  associate  with  him  any  number  of  persons,  not  less  than  the 
number  required  by  law  for  an  incorporation  for  similar  pur- 
poses at  least  two-thirds  of  whom  shall  be  citizens  of  the  United 


Stock  Coepobation  Law.  §  9. 

States  and  one  shall  be  a  resident  of  this  state,  and  they  may 
become  a  corporation  and  take  and  possess  the  property  and 
franchises  thus  sold,  and  which  were  at  the  time  of  the  sale 
possessed  by  the  corporation  whose  property  shall  have  been  so 
sold,  upon  making  and  acknowledging  and  filing  in  the  offices 
where  certificates  of  incorporation  are  required  by  law  to  be  filed, 
a  certificate  in  which  they  shall  describe  by  name  and  reference 
to  the  law  under  which  it  was  organized,  the  corporation  whose 
property  and  franchises  they  have  acquired,  and  the  court  by 
whose  authority  the  sale  had  been  made,  with  the  date  of  the 
judgment  or  decree  authorizing  or  directing  the  same,  and  a  brief 
description  of  the  property  sold,  and  also  the  following  par- 
ticulars : 

1.  The  name  of  the  new  corporation  intended  to  be  formed  by 
the  filing  of  such  certificate;  and  the  place  where  its  principal 
office  is  to  be  located. 

2.  The  maximum  amount  of  its  capital  stock  and  the  number 
of  shares  into  which  it  is  to  be  divided,  specifying  the  classes 
thereof,  whether  common  or  preferred,  and  the  amount  of  and 
rights  pertaining  to  each  class. 

3.  The  number  of  directors,  not  less  nor  more  than  the  number 
required  by  law  for  the  old  corporation,  who  shall  manage  the 
affairs  of  the  new  corporation,  and  the  names  and  post-office 
addresses  of  the  directors  for  the  first  year.  They  may  insert 
in  such  certificate  any  provisions  relating  to  the  new  corporation, 
or  its  management,  contained  in  any  plan  or  agreement  which 
may  have  been  entered  into  as  provided  in  section  ten  of  thia 
chapter.  Such  corporation  shall  be  vested  with,  and  be  entitled 
to  exercise  and  enjoy,  all  the  rights,  privileges  and  franchises, 
which  at  the  time  of  such  sale  belonged  to,  or  were  vested  in  the 
corporation  last  owning  the  property  sold,  or  its  receiver,  and  shall 
be  subject  to  all  the  provisions,  duties  and  liabilities  imposed 
by  law  on  that  cx)rporation.  Any  proceedings  heretofore  taken  in 
substantial  compliance  with  this  section  as  hereby  amended,  and 
any  and  all  incorporations  based  thereon  are  hereby,  ratified  and 
confirmed. 


§  10.  Stock  Cokporation  Law. 

§  10.    Contents  of  plan  of  agreement. 

At  or  previous  to  the  sale  the  purchasers  thereat,  or  the  person* 
for  whom  the  purchase  is  to  be  made,  may  enter  into  a  plan  or 
agreement,  for  or  in  anticipation  of  the  readjustment  of  the  respec- 
tive interests  therein  of  any  creditors,  mortgagees,  stockholders, 
or  any  of  them,  of  the  corporation  owning  such  property  and  fran- 
chises at  the  time  of  sale,  and  of  holders  of  claims  for  materials, 
supplies  and  equipment  furnished,  and  for  injuries  and  damages 
sustained,  in  and  about  the  operation,  maintenance  or  construc- 
tion of  any  or  all  the  property  formerly  owned  or  leased  to 
said  corporation,  and  for  the  representation  of  such  interests 
in  the  bonds  or  stock  of  the  new  corporation  to  be  formed,  and 
may  therein  regulate  voting  by  the  holders  of  the  preferred  and 
common  stock  at  any  meeting  of  the  stockholders,  and  may  pro- 
vide for,  and  regulate  voting  by  the  holders,  and  owners  of  any  or 
all  of  the  bonds  of  the  corporation,  foreclosed,  or  of  the  bonds 
issued  or  to  be  issued  by  the  new  corporation;  and  such  right  of 
voting  by  bondholders  shall  be  exercised  in  such  manner,  for  such 
period,  and  upon  such  conditions,  as  shall  be  therein  described- 
Such  plan  or  agreement  must  not  be  inconsistent  with  the  laws  of 
the  state  and  shall  be  binding  upon  the  corporation,  until  changed 
as  therein  provided,  or  as  otherwise  provided  by  law.  The  new 
oorporaiion  when  duly  organized,  pursuant  to  such  plan  or  agree- 
ment and  to  the  provisions  of  law,  may  issue  its  bonds  and  Htock 
in  confoiTTiity  with  the  provisions  of  such  plan  or  agreement,  and 
may  at  any  time  within  six  months  after  its  organization,  com- 
promise, settle  or  assume  the  payment  of  any  debt,  claim  or 
liability  of  the  former  corporation  or  any  claims  for  materials, 
supplies  and  equipment  furnished,  or  any  claims  for  injuries 
and  damages  sustained,  in  and  about  the  operation,  maintenance  or 
construction  of  any  or  all  the  property  formerly  owned  or  leased 
to  said  corporation,  upon  such  terms  as  may  be  lawfully 
approved  by  a  majority  of  the  agents  or  trustees  intrusted  with 
the  carrying  out  of  the  plan  or  agreement  of  reorganization,  and 
may  establish  preferences  in  favor  of  any  portion  of  its  capital 
stock  and  may  divide  its  stock  into  classes;  but  the  capital  stock 
of  the  new  corporation  shall  not  exceed  in  the  aggregate  the  maxi- 
mum amount  of  stock  mentioned  in  the  certificate  of  incorporation. 
Amended  by  L.   1911,  chap.  858.  i 

I 


Stock  Corporation  Law.  §§  11,  12. 

§11.  Sale  of  property;  possession  of  receiver  and  suits 
against  him. 

The  supreme  court  may  direct  a  sale  of  the  whole  of  the  prop- 
erty, rights  and  franchises  covered  by  the  mortgage  or  mortgages, 
or  deeds  of  trust  foreclosed  at  any  one  time  and  place  to  be  named 
in  tlie  judgment  or  order,  either  in  case  of  the  non-payment  of 
interest  only,  or  of  both  the  principal  and  interest  due  and  unpaid 
and  secured  by  any  such  mortgage  or  mortgages  or  deeds  of  trust. 
Neither  the  sale  nor  the  formation  of  the  new  corporation  shall 
interfere  with  the  authority  or  possession  of  any  receiver  of  such 
property  and  franchises,  but  he  shall  remain  liable  to  be  removed 
or  discharged  at  such  time  as  the  court  may  deem  proper.  No 
suit  or  proceeding  shall  be  commenced  against  such  receiver  unless 
founded  on  wilful  misconduct  or  fraud  in  his  trust  after  the 
expiration  of  sixty  days  from  the  time  of  his  discharge;  but  after 
the  expiration  of  sixty  days  the  new  corporation  shall  be  liable  in 
any  action  that  may  be  commenced  against  it,  and  founded  on  any 
act  or  omission  of  such  receiver  for  which  he  may  not  be  sued,  and 
to  the  same  extent  as  the  receiver,  but  for  this  section  would  be  or 
remain  liable,  or  to  the  same  extent  that  the  new  corporation 
would  be  had  it  done  or  omitt^ed  the  acts  complained  of. 

§  12.    IVIunicipalities  may  assent  to  plan  of  readjustment. 

The  commissioners,  corporate  authorities  or  proper  officers  of 
any  city,  town  or  village,  who  may  hold  stock  in  any  corporation, 
the  property  and  franchises  whereof  shall  be  liable  to  be  sold,  may 
assent  to  any  plan  or  agreement  of  reorganization  which  lawfully 
provides  for  the  formation  of  a  new  corporation,  and  the  issue  of 
stock  therein  to  the  proper  authorities  or  officers  of  such  cities, 
towns  or  villages  in  exchange  for  the  stock  of  the  old  or  former 
corporation  by  them  respectively  held.  And  such  commissioners, 
corporate  authorities  or  other  proper  officers  may  assign,  transfer 
or  surrender  the  stock  so  held  by  them  in  the  manner  required  by 
such  plan,  and  accept  in  lieu  thereof  the  stock  issued  by  such  new 
corporation  in  conformity  therewith. 


§§  13,  14.  Stock  Corpokation  Law. 

§  13.    Change  of  place  of  business. 

Any  stock  corporation  now  existing  or  hereafter  organized  under 
the  laws  of  this  state,  except  moneyed  corporations,  may  at  any 
time  change  its  principal  office  and  place  of  business  from  the  city, 
town  or  county  named  in  its  certificate  of  incorporation,  or  to 
which  it  may  have  been  changed  under  the  provisions  of  this  sec- 
tion, to  any  other  city,  town  or  county  in  this  state,  in  which  it 
mny  desire  to  actually  transact  and  carry  on  its  regular  busines:? 
from  day  to  day,  provided  that  such  change  has  been  authorized, 
either  by  unanimous  consent  of  the  stockholders  expressed  in  writ- 
ing and  duly  acknowledged  and  filed  in  the  office  of  the  secretary 
of  state,  by  a  vote  of  the  stockholders  of  said  corporation  at  a 
special  meeting  of  the  stockholders  called  for  that  purpose,  or 
such  change  has  been  effected  by  an  act  of  legislature  creating  a 
separate  and  distinct  county  wholly  within  the  limits  and  boun- 
daries of  a  then  existing  county  or  counties.  When  such  change 
shall  be  authorized  by  the  stockholders  or  effected  by  the  creation 
of  a  new  county  w^holly  within  the  limits  and  boundaries  of  the 
then  existing  county  or  counties  as  herein  provided,  the  president 
and  secretary  and  a  majority  of  the  directors  of  such  corporation 
shall  sign  a  certificate  stating  the  name  of  said  corporation,  the  city, 
town  and  county  where  its  principal  office  and  place  of  business 
was  originally  located,  and  to  which  it  may  have  been  subsequently 
changed,  and  the  city,  town  and  county  to  which  it  is  desired 
to  change  its  said  principal  office  and  place  of  business,  and  that 
it  is  the  purpose  of  said  corporation  to  actually  transact  and  carry 
on  its  regular  business  from  day  to  day  at  such  place,  and  that 
such  change  has  been  authorized  as  herein  provided,  and  the 
names  of  the  directors  of  said  corporation  and  their  respective 
places  of  residence,  which  certificate  shall  be  verified  by  the  oaths 
of  all  the  persons  signing  the  same,  and  when  so  signed  and  veri- 
fied, shall  be  filed  in  the  office  of  the  secretary  of  state  and  a 
duplicate  thereof  in  the  office  of  the  clerk  of  the  county  from 
which  said  principal  office  and  place  of  business  is  about  to  be 
removed  or  changed,  and  another  in  the  office  of  the  clerk  of  the 
county  to  which  said  removal  or  change  is  to  be  made,  and  there- 
upon the  principal  office  and  place  of  business  of  such  corporation 
shall  be  changed  as  stated  in  said  certificate. 

Amended  by  L.   1915,  cliap.    117.     In  effect  March  24,  1915. 

§  14.    Combinations  prohibited, 

ITo  domestic  stock  corporation  and  no  foreign  corporation  doing 
business  in  this  state  shall  combine  with  any  other  corporation  or 


Stock  Corporation  Law.  §§  15,  16. 

person  for  the  creation  of  a  monopoly  or  the  unlawful  restraint  of 
trade  or  for  the  prevention  of  competition  in  any  necessary  of 
life. 

§  15.    Merger. 

Any  domestic  stock  corporation  and  any  foreign  stock  corpora- 
tion authorized  to  do  business  in  this  state  lawfully  owning  all  the 
stock  of  any  other  stock  corporation  organized  for,  or  engaged  in 
business  similar  or  incidental  to  that  of  the  possessor  corporation 
may  file  in  the  office  of  the  secretary  of  state,  under  its  common 
seal,  a  certificate  of  such  ownership,  and  of  the  resolution  of  its 
board  of  directors  to  merge  such  other  corporation,  and  thereupon 
it  shall  acquire  and  become,  and  be  possessed  of  all  the  estate, 
property,  rights,  privileges  and  franchises  of  such  other  corpora- 
tion, and  they  shall  vest  in  and  be  held  and  enjoyed  by  it  as  fully 
and  entirely  and  without  change  or  diminution  as  the  same  were 
before  held  and  enjoyed  by  such  other  corporation,  and  be  man- 
ag'^d  Bnd  controlled  by  the  board  of  directors  of  such  possessor 
corporation,  and  in  its  name,  but  without  prejudice  to  any  liabil- 
ities of  such  other  corporation  or  the  rights  of  any  creditors 
thereof.  Any  bridge  corporation  may  be  merged  under  this  sec- 
tion with  any  railroad  corporation  which  shall  have  acquired  the 
right  by  contract  to  run  its  cars  over  the  bridge  of  such  bridge 
corporation. 

§  16.    Voluntary  sale  of  franchise  and  properly. 

A  stock  corporation,  except  a  railroad  corporation  and  except 
as  otherwise  provided  by  law,  with  the  consent  of  two-thirds  of  its 
stock,  may  sell  and  convey  its  property,  rights,  privileges  and  fran- 
chises, or  any  interest  therein  or  any  part  thereof  to  a  domestic 
corporation,  engaged  in  a  business  of  the  same  general  character, 
or  which  might  be  included  in  the  certificate  of  incorporation  of 
a  corporation  organizing  under  any  general  law  of  this  state  for  a 
business  of  the  same  general  character,  and  a  domestic  corporation 
the  principal  business  of  which  is  carried  on  in,  and  the  principal 
tangible  property  of  which  is  located  within  a  state  adjoining  the 
state  of  New  York,  may  with  the  consent  of  the  holders  of  ninety- 


§  17.  Stock  Coepokation  Law. 

five  per  centum  of  its  capital  stock,  sell  and  convey  its  property 
situate  without  the  state  of  New  York,  not  including  its  franchises, 
to  a  corporation  organized  under  the  laws  of  such  adjoining  state, 
and  such  sale  and  conveyance  shall,  in  case  of  a  sale  to  a  domestic 
corporation,  vest  the  rights,  property  and  franchises  thereby  trans- 
ferred, and  in  case  of  a  sale  to  a  foreign  corporation  the  property 
sold,  in  the  corporation  to  which  they  are  conveyed  for  the  term  of 
its  corporate  existence,  subject  to  the  provisions  and  restrictions 
applicable  to  the  corporation  conveying  them.  Before  such  sale 
or  conveyance  shall  be  made  such  consent  shall  be  obtained  at  a 
meeting  of  the  stockholders  called  upon  like  notice  as  that  required 
for  an  annual  meeting. 

§  17.  Rights  of  non-consenting  stockholders  on  voluntary 
sale  of  franchise  and  property. 

If  any  stocldiolder  not  voting  in  favor  of  such  proposed  sale  or 
conveyance  shall  at  such  meeting,  or  within  twenty  days  thereafter, 
object  to  such  sale,  and  demand  payment  for  his  stock,  he  may, 
within  sixty  days  after  such  meeting,  apply  to  the  supreme  court 
at  any  special  tenn  thereof  held  in  the  district  in  which  the 
principal  place  of  business  of  such  corporation  is  situated,  upon 
eight  days'  notice  to  the  corporation,  for  the  appointment  of  three 
persons  to  appraise  the  value  of  such  stock,  and  the  court  shall 
appoint  three  such  appraisers,  and  designate  the  time  and  place 
of  their  proceedings  as  shall  be  deemed  proper,  and  also  direct 
the  manner  in  which  payment  for  such  stock  shall  be  made  to 
such  stockholders.  The  court  may  fill  any  vacancy  in  the  board 
of  appraisers  occurring  by  refusal  or  neglect  to  serve  or  otherwise. 
The  appraisers  shall  meet  at  the  time  and  place  designated,  and 
they  or  any  two  of  them,  after  being  duly  sworn  honestly  and 
faithfully  to  discharge  their  duties,  shall  estimate  and  certify  the 
value  of  such  stock  at  the  time  of  such  dissent,  and  deliver  one 
copy  to  such  corporation,  and  another  to  such  stockholder,  if 
demanded;  the  charges  and  expenses  of  the  appraisers  shall  be 
paid  by  the  corporation.  ^Vhen  the  corporation  shall  have  paid 
the  amount  of  such  appraisal,  as  directed  by  the  court,  such  stock- 
holders shall  cease  to  have  any  interest  in  such  stock  and  in  the 
corporate  property  of  such  corporation  and  such  stock  may  be 
held  or  disposed  of  by  such  corporation. 


Stock  Cobpokation  Law.  §§  18,  19. 

§  18.    Alterations  or  extension  of  business. 

Any  stock  corporation  heretofore  or  hereafter  organized  under 
any  general  or  special  law  of  this  state  may  alter  its  certificate  of 
incorporation  so  as  to  include  therein  any  purposes,  powers  or 
provisions  which  at  the  time  of  such  alteration  may  apply  to  cor- 
porations engaged  in  a  business  of  the  same  general  character,  or 
which  might  be  included  in  the  certificate  of  incorporation  of  a 
corporation  organized  under  any  general  law  of  this  state  for  a 
business  of  the  same  general  character,  by  filing  in  the  manner 
provided  for  the  original  certificate  of  incorporation  an  amended 
certificate,  executed  by  the  president  and  secretary,  stating  the 
alteration  proposed,  and  that  the  same  has  been  duly  authorized 
by  a  vote  of  a  majority  of  the  directors  and  also  by  a  vote  of  stock- 
holders representing  at  least  three-fifths  of  the  capital  stock,  at 
a  meeting  of  the  stockholders  called  for  the  purpose  in  the  man- 
ner ])rovided  in  section  sixty-three  of  this  chapter,  and  a  copy 
of  the  proceedings  of  such  meeting,  verified  by  the  affidavit  of  one 
of  the  directors  present  thereat,  shall  be  filed  with  such  amended 
certificate. 

§  19.  Issuance  of  shares  of  stock  without  nominal  or  par 
value. 

Upon  the  formation  or  the  reorganization  of  any  stock  corpora- 
tion, other  than  a  moneyed  corporation,  and  other  than  a  corpora- 
tion under  the  jurisdiction  of  any  public  service  commission,  the 
certificate  of  incorporation  may  provide  for  the  issuance  of  the 
shares  of  stock  of  such  corporation,  other  than  preferred  stock 
having  a  preference  as  to  principal,  without  any  nominal  or  par 
value  by  stating  in  such  certificate: 

(1)  The  number  of  shares  that  may  be  issued  by  the  corpora- 
tion, and  if  any  of  such  shares  be  preferred  stock,  the  preferences 
thereof.  If  such  preferred  stock  or  any  part  thereof  shall  have  a 
preference  as  to  principal,  the  certificate  shall  state  the  amount 
of  such  preferred  stock  having  such  preference,  the  particular 
character  of  such  preferences,   and   the   amoimt  of  each   share 


§  19.  Stock  Corpokation  Law. 

thereof,  wliicli  shall  be  five  dollars  or  some  multiple  of  five  dollars, 
but  not  more  than  one  hundred  dollars. 

(2)  The  amount  of  capital  with  which  the  corporation  will 
carry  on  business,  which  amount  shall  be  not  less  than  the  amount 
of  preferred  stock  (if  any)  authorized  to  be  issued  with  a  prefer- 
ence as  to  principal,  and  in  addition  thereto  a  sum  equivalent  to 
five  dollars  or  to  some  multiple  of  five  dollars  for  every  share  au- 
thorized to  be  issued  other  than  such  preferred  stock;  but  in  no 
event  shall  the  amount  of  such  capital  be  less  than  five  hundred 
dollars. 

Such  statements  in  the  certificate  shall  be  in  lieu  of  any  state- 
ments prescribed  by  the  law  under  which  the  corporation  shall 
have  been  formed  or  reorganized  as  to  the  amount  or  the  maxi- 
mum amount  of  its  capital  stock  or  the  number  of  shares  into 
which  the  same  shall  be  divided,  or  of  the  amount  or  the  par  value 
of  such  shares. 

Each  share  of  such,  stock  without  nominal  or  par  value  shall 
be  equal  to  every  other  share  of  such  stock,  subject  to  the  prefer- 
ences given  to  the  preferred  stock  if  any  authorized  to  be  issued. 
Every  certificate  for  such  shares  without  nominal  or  par  value 
shall  have  plainly  written  or  printed  upon  its  face  the  number  of 
such  shares  which  it  represents  and  the  number  of  such  shares 
which  the  corporation  is  authorized  to  issue,  and  no  such  certifi- 
cate shall  express  any  nominal  or  par  value  of  suoh  shares.  The 
certificates  for  preferred  shares  having  a  preference  as  to  princi- 
pal shall  state  briefiy  the  amount  which  the  holders  of  each  of 
such  preferred  shares  shall  be  entitled  to  receive  on  account  of 
principal  from  the  surplus  assets  of  the  corporation  in  preference 
to  the  holders  of  other  shares,  and  shall  state  briefly  any  other 
rights  or  preferences  given  to  the  holders  of  such  shares. 

Such  corporation  may  issue  and  may  sell  its  authorized  shares, 
from  time  to  time,  for  such  consideration  as  may  be  prescribed  in 
the  certificate  of  incorporation,  or  as  from  time  to  time  may  be 
fixed  by  the  board  of  directors  pursuant  to  authority  conferred  in 


Stock  Corpokation  Law.  §  20. 

such  certificate,  or  if  such  certificate  shall  not  so  provide,  then  by 
the  consent  of  the  holders  of  two-thirds  of  each  class  of  shares 
then  outstanding  given  at  a  meeting  called  for  that  purpose  in 
such  manner  as  shall  he  prescribed  by  the  by-laws.  Any  and  all 
shares  issued  as  permitted  by  this  section  shall  be  deemed  fully 
paid  and  non-assessable  and  the  holder  of  such  shares  shall  not  be 
liable  to  the  corporation  or  to  its  creditors  in  respect  thereof. 
Added  by  L.*1912,  chap.  351   (in  eflfeot  April  15,  1912). 

§  20.    Commencement  of  business;  authorized  debts. 

No  corporation  formed  pursuant  to  section  nineteen  hereof  shall 
begin  to  carry  on  busine&s  or  shall  incur  any  debts  until  the  amount 
of  capital  stated  in  its  certificate  of  incorporation  shall  have  been 
fully  paid  in  money,  or  in  property  taken  at  its  actual  value.  In 
case  the  amount  of  capital  stated  in  its  certificate  of  incorpora- 
tion shall  be  increased  as  herein  provided,  such  corporation  shall 
not  increase  the  amount  of  its  indebtedness  then  existing  until  it 
shall  have  received  in  money  or  property  the  amount  of  such  in- 
crease of  its  stated  capital.  The  directors  of  the  corporation  as- 
senting to  the  creation  of  any  debt  in  violation  of  this  section 
shall  be  liable  jointly  and  severally  for  such  debt;  but  no  action 
shall  be  brought  under  the  foregoing  provision  of  this  section  un- 
less within  one  year  after  the  debt  shall  have  been  incurred  the 
creditor  shall  have  served  upon  the  director  written  notice  of  in- 
tention to  hold  him  personally  liable  for  such  debt.  Any  direc- 
tor who,  because  of  any  such  liability  under  this  section,  shall 
pay  any  debt  of  the  corporation,  shall  be  subrogated  to  all  rights 
of  the  creditor  in  respect  thereof  against  the  corporation  and  its 
property  and  also  shall  be  entitled  to  contribution  from  all  other 
directors  of  the  corporation  similarly  liable  for  the  same  debt  and 
the  personal  representative  of  any  such  director  who  shall  have 
died  before  making  such  contribution. 

No  such  corporation  shall  declare  any  dividend  which  shall  re- 
duce the  amount  of  its  capital  below  the  amount  stated  in  the  cer- 


§  21.  Stock  Corpokation  Law. 

tificate  as  the  amount  of  capital  with  which  the  corporation  will 
carry  on  business;  In  case  any  such  dividend  shall  be  declared, 
the  directors  in  whose  administration  the  same  shall  have  been 
declared,  except  those  who  may  have  caused  their  dissent  there- 
from to  be  entered  upon  the  minutes  of  such  directors  at  the  time 
or  who  were  not  present  when  such  action  was  taken,  shall  be 
liable  jointly  and  severally  to  such  corporation  and  to  the  cred- 
itors thereof  to  the  full  amount  of  any  loss  sustained  by  such 
corporation  or  by  its  creditors  respectively  by  reason  of  such 
dividend. 

Added  by  L.  1912,  chap.  351   (in  effect  April  15,  1912). 

§  21.    Taxation. 

The  organization  tax  payable  under  section  one  hundred  and 
eighty  of  the  tax  law  by  any  corporation  issuing  such  shares 
without  designated  monetary  value  shall  be  at  the  rate  of  five 
cents  on  each  such  share  which  the  corporation  is  authorized  to 
issue,  and  a  like  tax  upon  any  subsequent  increase  thereof.  The 
tax  payable  under  section  two  hundred  and  seventy  of  the  tax 
law  in  respect  of  any  sale  or  agreement  of  sale  or  any  memorandum 
of  sale  or  delivery  or  transfers  of  shares  or  certificates  of  any 
share  without  designated  monetary  value  hereafter  issued  by  any 
such  corporation  issuing  such  shares  shall  be  at  the  rate  of  two 
cents  for  each  and  every  share  of  such  stock  so  transferred.  The 
franchise  tax  upon  any  corporation  issuing  such  shares  of  stock 
payable  under  section  one  hundred  and  eighty-two  of  the  tax  law 
shall  be  determined  by  the  amoimt  of  the  gross  assets  of  such 
corporation  employed  in  any  business  within  this  state,  less  such 
proportion  of  its  liabilities  as  shall  represent  the  ratio  of  its  gross 
assets  employed  in  any  business  within  this  state  to  its  entire  gross 
assets  wherever  employed  in  business,  and  the  rate  of  such 
franchise  tax  shall  be  fixed  in  the  manner  provided  in  said  section 
one  hundred  and  eighty-two  of  the  tax  law.  For  this  purpo?^ 
the  rate  of  dividends  shall  be  computed  by  dividing  the   total 


Stock  Cobpoeation  Law.  §  22. 

amount  of  dividends  which  have  been  paid  during  the  year  by  the 
amount  of  assets  of  the  corporation  upon  the  first  day  of  such 
year. 

Added  by  L.  1912,  chap.  351   (in  effect  April  15,  1912). 

§  22.    Increase  or  reduction  of  shares  or  capital. 

Any  corporation  formed  or  reorganized  pursuant  to  section  nine- 
teen may  amend  its  certificate  of  incorporation  so  as  to  increase  or 
to  reduce  the  number  of  shares  which  it  may  issue,  or  so  as  to  in- 
crease or  to  reduce  the  amount  of  its  stated  capital,  by  filing,  in 
the  manner  provided  for  the  original  certificate  of  incorporation, 
a  certificate  of  amendment  under  seal  executed  by  its  president  or 
a  vice-president  and  by  its  secretary  or  its  treasurer,  stating  the 
amendment  proposed  and  that  the  same  has  been  duly  authorized 
by  a  vote  of  a  majority  of  the  directors  and  also  by  the  vote  of 
the  holders  of  at  least  three-fifths  of  the  outstanding  shares  of 
each  class  issued  by  the  corporation,  at  a  meeting  of  the  stock- 
holders called  for  the  purpose  in  the  manner  provided  in  section 
sixty- three  hereof,  and  by  filing  with  such  certificate  of  amend- 
ment a  copy  of  the  proceedings  of  such  meeting,  made,  signed, 
verified  and  acknowledged  by  the  president  or  a  vice-president 
and  by  the  secretary  or  the  treasurer  of  the  corporation;  but  an 
amendment  cannot  be  made  under  this  section  unless  as  so 
amended  the  certificate  of  incorporation  could  lawfully  have  been 
filed  under  section  nineteen  of  this  chapter.  In  case  of  a  reduc- 
tion of  the  amount  of  capital  of  a  corporation,  a  certificate  setting 
forth  the  whole  amount  of  the  ascertained  debts  and  liabilities  of 
the  corporation  shall  be  made,  signed,  verified  and  acknowledged 
by  the  president  or  a  vice-president  and  by  the  secretary  or  the 
treasurer  of  the  corporation  and  shall  be  filed  with  the  certificate 
of  amendment;  and  such  certificate  of  amendment  shall  have  en- 
dorsed thereon  the  approval  of  the  comptroller  to  the  effect  that 
as  so  stated  the  reduced  amount  of  capital  is  sufficient  for  the 
proper  purposes  of  the  corporation  and  is  in  excess  of  its  ascer- 
tained debts  and  liabilities. 

Added  by  L.  1912,  chap.  351  (in  etfeot  April  15,  1912). 


§23.  Stock  Corpoeation  Law. 

§  23.  Amount  of  capital  stook  and  of  shares  within  mean- 
ing of  other  laws. 

For  the  purpose  of  any  rule  of  law  or  of  any  statutory  pro- 
vision (other  than  the  foregoing  sections  nineteen,  twenty, 
twenty-one  and  twenty-two)  relating  to  the  amount  of  the  capital 
stock  of  a  corporation  or  the  amount  or  par  value  of  its  shares,  the 
aggregate  amount  of  the  capital  stock  of  any  such  corporation 
formed  pursuant  to  section  nineteen  hereof  shall  be  deemed  to  be 
the  aggregate  amount  specified  in  the  certificate  or  amended  cer- 
tificate of  incorporation  or  of  reorganization  as  the  amount  of 
capital  with  which  the  corporation  will  carry  on  business ;  the 
amount  or  the  par  value  of  each  share  of  preferred  stock  having  a 
preference  as  to  principal  shall  be  deemed  to  be  the  amount  thereof 
so  specified  in  such  certificate  or  such  amend^ed  certificate ;  and  the 
amount  or  the  par  value  of  each  other  share  shall  be  deemed  to 
be  an  aliquot  part  of  the  aggregate  capital  so  specified  in  such 
certificate  or  in  such  amended  certificate  in  excess  of  the  specified 
amount  (if  any)  of  the  preferred  stock  therein  authorized  to  be 
issued  with  a  preference  as  to  principal. 

Added  by  L.  1912    chap.  351  (in  effect  April  15,  1912). 


Stock  Corporation  Law.  §§  25,  26. 

ARTICLE  8. 

Directors  and  Officers. 

Section  25.  Directx)rs. 

26.  Change  of  number  of  directors. 

27.  When  acts  of  directors  void. 

28.  Liability   of  directors   for   making   unauthorized   dividend*. 

29.  Liability  of  directors  for  loans  to  stockholders. 

30.  Officers. 

31.  Inspectors  and  their  oath. 

32.  Books  to  be  kept. 

33.  Stock  books  of  foreign  corporations. 

34.  Annual  report  to  secretary  of  state. 

35.  Liability    of    officers    for    false    certificates,    reports    or    public 

notices. 

§  25.    Directors. 

The  directors  of  every  stock  corporation  shall  be  chosen  at  the 
time  and  place  fixed  by  the  by-laws  of  the  corporation  by  a  plural- 
ity of  the  votes  at  such  election.  Each  director  shall  be  a  stock- 
holder unless  otherwise  provided  in  the  certificate,  or  in  a  by-law 
adopted  by  a  stockholders'  meeting.  Vacancies  in  the  board  of 
directors  shall  be  filled  in  the  manner  prescribed  in  the  by-laws. 
Notice  of  the  time  and  place  of  holding  any  election  of  directors 
shall  be  given  by  publication  thereof,  at  least  once  in  each  week 
for  two  successive  weeks  immediately  preceding  such  election,  in 
a  newspaper  published  in  the  county  where  such  election  is  to  be 
held,  and  in  such  other  manner  as  may  be  prescribed  in  the  by-law8. 
Policyholders  of  an  insurance  corporation  shall  be  eligible  to 
election  as  directors,  whether  or  not  they  be  stockholders.  At 
least  one-fourth  in  number  of  the  directors  of  every  stock  corpora- 
tion .shall  be  elected  annually. 

§  26.    Change  of  number  of  directors. 

The  number  of  directors  of  any  stock  corporation  may  be 
increased  or  reduced,  but  not  below  the  minimum  number  pre- 
scribed by  law,  when  the  stockholders  owning  a  majority  of  the 


§  26.  Stock  Corporation  Law. 

stock  of  the  corporation  shall  so  determine,  at  a  meeting  to  be  held 
at  the  usual  place  of  meeting  of  the  directors,  on  two  weeks'  notice 
in  writing  to  each  stockholder  of  record.  Such  notice  shall  be 
served  personally  or  by  mail,  directed  to  each  stockholder  at  his 
last  known  post-office  address.  Proof  of  the  service  of  such  notice 
shall  be  filed  in  the  office  of  the  corporation  at  or  before  the  time 
of  such  meeting.  The  proceedings  of  such  meeting  shall  be 
entered  in  the  minutes  of  the  corporation  and  a  transcript  thereof 
verified  by  the  president  and  secretary  of  the  meeting  shall  be  fi.led 
in  the  offices  where  the  original  certificates  of  incorporation  were 
filed.  Such  increase  or  reduction  may  also  be  effected  by  unani- 
mous consent  without  a  meeting,  in  which  case  there  shall  be  filed 
in  the  offices  herein  specified  the  unanimous  consent  of  the  stock- 
holders in  writing,  signed  by  them,  or  their  duly  authorized 
proxies,  but  no  such  consent  shall  be  valid  unless  there  is  annexed 
thereto  an  affidavit  of  the  custodian  of  the  stock  book  of  such  cor- 
poration stating  that  the  persons  who  have  signed  such  consent, 
either  in  person  or  by  proxy,  are  the  holders  of  record  of  the 
entire  capital  stock  of  said  corporation  issued  and  outstanding. 
If  a  corporation  formed  under  or  subject  to  the  banking  law,  the 
consent  of  the  superintendent  of  banks,  and  if  an  insurance  cor- 
poration, the  consent  of  the  superintendent  of  insurance,  shall  be 
first  obtained  to  such  increase  or  reduction  of  the  number  of 
directors.  This  section  shall  apply  to  any  stock  corporation 
whether  organized  under  a  general  or  special  law,  and  the  num- 
ber of  directors  may  be  increased  as  hereby  provided  notwithstand- 
ing the  maximum  number  of  directors  now  prescribed  by  law.  If 
the  number  of  directors  be  increased,  the  additional  directors 
authorized  by  such  increase  shall  be  elected  by  the  votes  of  a 
majority  of  the  directors  in  office  at  the  time  of  the  increase.  If 
the  original  or  an  amended  certificate  of  incorporation  of  the 
corporation  shall  provide  that  the  directors  shall  be  divided  into 
two  or  more  classes,  whose  terms  of  office  shall  respectively  expire 
at  different  times,  the  additional  directors  shall  be  divided  among 
.such  classes  as  nearly  as  practicable  in  proportion  to  the  respective 
numbers  of  directors  constituting  each  class  prior  to  such  increase. 
Amended  by  L.  1909,  chap.  421. 


Stock  Corporation  Law.  §§  27,  28. 

§  27.    When  acts  of  directors  void. 

When  the  directors  of  any  corporation  for  the  first  year  of  its 
corporate  existence  shall  hold  over  and  continue  to  be  directors 
after  the  first  year,  because  of  their  neglect  or  refusal  to  adopt  the 
by-laws  required  to  enable  the  stockholders  to  hold  the  annual 
election  for  directors,  all  their  acts  and  proceedings  while  so  hold- 
insr  over,  done  for  and  in  the  name  of  the  corporation,  designed  to 
charge  upon  it  any  liability  or  obligation  for  the  services  of  any 
such  director,  or  any  officer,  or  attorney  or  counsel  appointed  by 
them,  and  every  such  liability  or  obligation  shall  be  held  to  be 
fraudulent  and  void. 

§  28.  Liability  of  directors  for  making  unauthorized 
dividends. 

The  directors  of  a  stock  corporation  shall  not  make  dividends, 
except  from  the  surplus  profits  arising  from  the  business  of  such 
corporation,  nor  divide,  withdraw  or  in  any  way  pay  to  the  stock- 
holders or  any  of  them,  any  part  of  the  capital  of  such  corporation, 
or  reduce  its  capital  stock,  except  as  authorized  by  law.  In  case 
of  any  violation  of  the  provisions  of  this  section,  the  directors 
under  whose  administration  the  same  may  have  happened,  except 
those  who  may  have  caused  their  dissent  therefrom  to  be  entered 
at  large  upon  the  minutes  of  such  directors  at  the  time,  or  were 
not  present  when  the  same  happened,  shall  jointly  and  severally 
be  liable  to  such  corporation  and  to  the  creditors  thereof  to  the 
full  amount  of  any  loss  sustained  by  such  corporation  or  its 
creditors  respectively  by  reason  of  such  withdrawal,  division  or 
reduction.  But  this  section  shall  not  prevent  a  division  and  dis- 
tribution of  the  assets  of  any  such  corporation  remaining  after  the 
payment  of  all  its  debts  and  liabilities  upon  the  dissolution  of  such 
corporation  or  the  expiration  of  its  charter;  nor  shall  it  prevent 
a  corporation  from  accepting  shares  of  its  capital  stock  in  complete 
or  partial  settlement  of  a  debt  owing  to  the  corporation,  which  by 
the  board  of  directors  shall  be  deemed  to  be  bad  or  doubtful. 


§§  29-31.  Stock  Corporation  Law. 

§  29.    Liability  of  directors  for  loans  to  stockholders. 

No  loan  of  moneys  shall  be  made  by  any  stock  corporation, 
except  a  moneyed  corporation,  or  by  any  officer  thereof  out  of  its 
funds  to  any  stockholder  therein,  nor  shall  any  such  corporation  or 
officer  discount  any  note  or  other  evidence  of  deht,  or  receive  the 
same  in  payment  of  any  instalment  or  any  part  thereof  due  or  to 
l->ecome  dne  on  any  stock  in  such  corporation,  or  receive  or  dis- 
count any  note,  or  other  evidence  of  debt,  to  enable  any  stock- 
holder to  withdraw  any  part  of  the  money  paid  in  by  him  on  his 
stock.  In  case  of  the  violation  of  any  provision  of  this  section, 
the  officers  or  directors  making  such  loan,  or  assenting  thereto, 
or  rfceiving  or  discounting  such  notes  or  other  evidences  of  debt, 
shall,  jointly  and  severally,  be  personally  liable  to  the  extent  of 
such  loan  and  interest,  for  all  the  debts  of  the  corporation  con- 
ti'acted  before  the  repayment  of  the  sum  loaned,  and  to  the  full 
amount  of  the  notes  or  other  evidences  of  debt  so  received  or 
discounted,  with  interest  from  the  time  such  liability  accrued. 

§  30.    Officers, 

The  directors  of  a  stock  corporation  may  appoint  from  their 
number  a  president,  and  may  appoint  a  secretary,  treasurer,  and 
other  officers,  agents  and  employees,  who  shall  respectively  have 
such  powers  and  perform  such  duties  in  the  management  of  the 
property  and  affairs  of  the  corporation,  subject  to  the  control  of 
the  directors,  as  may  be  prescribed  by  them  or  in  the  by-laws. 
The  directors  may  require  any  such  officer,  agent  or  employee  to 
give  security  for  the  faithful  performance  of  his  duties,  and  may 
remove  him  at  pleasure.  The  policyholders  of  an  insurance  cor- 
poration shall  be  eligible  to  election  or  appointment  as  its  officers. 

§  31.    Inspectors  and  their  oath. 

The  inspectors  of  election  of  every  stock  corporation  shall  be 
appointed  in  the  manner  prescribed  in  the  by-laws,  but  the  inspec- 
tors of  the  first  election  of  directors  and  of  all  previous  meetings 
of  the  stockholderi  shall  be  appointed  by  the  board  of  directors 
named  in  the  certificate  of  incorporation.  No  director  or  officer 
of  a  moneyed  corporation  shall  be  eligible  to  election  or  appoint- 


Stock:  Corpoi?ation  Law.  §  82. 

ment  as  inspector.  Each  inspector  shall  be  entitled  to  a  reason- 
able compensation  for  his  services,  to  be  paid  by  the  corporation, 
and  if  any  inspector  shall  refuse  to  serve,  or  neglect  to  attend  at 
the  election,  or  his  office  become  vacant,  the  meeting  may  appoint 
an  inspector  in  his  place  unless  the  by-laws  otherwise  provide. 
The  inspectors  appointed  to  act  at  any  meeting  of  the  stocldi elders 
shall,  before  entering  upon  the  discharge  of  their  duties,  be  sworn 
to  faithfully  execute  the  duties  of  inspector  at  such  meeting  with 
strict  impartiality,  and  according  to  the  best  of  their  ability,  and 
the  oath  so  taken  shall  be  subscribed  by  them,  and  immediately 
filed  in  the  office  of  the  clerk  of  the  county  in  which  such  election 
or  meeting  shall  be  held,  with  a  certificate  of  the  result  of  the  vote 
taken  thereat. 

§  32.    Books  to  be  kept. 

Every  stock  corporation  shall  keep  at  its  office  correct  books  of 
account  of  all  its  business  and  transactions,  and  a  book  to  be  known 
as  the  stock  book,  containing  the  names,  alphabetically  arranged, 
of  all  persons  who  are  stockholders  of  the  corporation,  showing 
their  places  of  residence,  the  number  of  shares  of  stock  held  by 
them  respectively,  the  time  when  they  respectively  became  the 
owners  thereof,  and  the  amount  paid  thereon.  The  stock  book  of 
every  such  corporation  shall  be  open  daily,  during  at  least  three 
business  hours,  for  insipection  by  any  judgment  creditor  of  the 
corporation;  or  by  any  person  who  shall  have  been  stockholder 
of  record  in  such  corporation  for  at  least  six  months  immediately 
preceding  his  demand;  or  by  any  person  holding  stock  of  such  cor- 
poration to  an  amount  equal  to  five  per  centum  of  all  its  out- 
standing shares;  or  by  any  person  thereunto  in  writing 
authorized  by  the  holders  of  stock  of  sucli  corporation 
to  an  amount  equal  to  five  per  centum  of  all  of  its 
outstanding  shares.  Persons  so  entitled  to  inspect  stock 
books  may  make  extracts  therefrom.  No  transfer  of 
stock  fehall  be  valid  as  against  the  corporation,  its  stockholders  and 
creditors  for  any  purpose  except  to  render  the  transferee  liable 
fot  the  debts  of  the  corporation  to  the  extent  provided  for  in  this 
chapter,  until  it  shall  have  been  entered  in  such  book  as  required 
by  this  section,  by  an  entry  showing  from  and  to  whom  trans- 
ferred.    The  stock  book  of  every  such  corporation  and  the  books 


§  33.  Stock  Corporation  Law. 

of  account  of  every  bank  shall  be  presumptive  evidence  of  the  facts 
therein  so  stated  in  favor  of  the  plaintiff,  in  any  action  or  proceed- 
ing against  such  corporation  or  any  of  its  officers,  directors  or 
stockholders.  Every  corporation  that  shall  neglect  or  refuse  to 
keep  or  cause  to  be  kept  such  books,  or  to  keep  any  book  open  for 
inspection  as  herein  required,  shall  forfeit  to  the  people  the  sum  of 
fifty  dollars  for  every  day  it  shall  so  neglect  or  refuse.  If  any 
officer  or  agent  of  any  such  corporation  shall  wilfully  neglect  or 
refuse  to  make  any  proper  entry  in  such  book  or  books,  or  shall 
neglect  or  refuse  to  exhibit  the  same,  or  to  allow  them  to  be  in- 
spected and  extracts  taken  therefrom  as  provided  in  this  section, 
the  corporation  and  such  officer  or  agent  shall  each  forfeit  and  pay 
to  the  party  injured  a  penalty  of  fifty  dollars  for  every  such  neglect 
or  refusal,,  and  all  damages  resulting  to  him  therefrom.  It  s.hall 
be  a  defense  to  any  action  for  penalties  under  this  section  that 
the  person  suing  therefor  has  within  two  years  sold  or  offered  for 
sale  any  list  of  stockholders  of  such  corporation  or  of  any  other 
corporation,  or  has  aided  or  abetted  any  person  in  procuring  any 
stock  list  for  any  such  purpose.  Nothing  herein  impairs  the 
power  of  the  courts  to  compel  by  mandamus  or  judgment  the  pro- 
duction for  examination  by  any  stockholder  of  the  stock  books 
of  a  corporation. 

Amended  by  L.  1916,  chap.  127.    In  effect  April  3,  1916. 

§  33.    Stock  books  of  foreign  corporations. 

Every  foreign  stock  corporation  having  an  office  for  the  transac- 
tion of  business  in  this  state,  except  moneyed  and  railroad  corpo- 
rations, shall  keep  therein  a  book  to  be  known  as  a  stock  book, 
containing  the  names,  alphabetically  arranged,  of  all  persons 
who  are  stockholders  of  the  corporation,  showing  their  places  of 
residence,  the  number  of  shares  of  stock  held  by  them  respectively, 
the  time  when  they  respectively  became  the  owners  thereof,  and 
the  amount  paid  thereon.  Such  stock  book  shall  be  open  daily, 
during  business  hours,  for  inspection  by  any  judgment  creditor 
vjf  such  corporation  ;  by  any  officer  of  this  state  authorized  by 
law  to  investigate  the  affairs  of  any  such  corporation;  by  any 
person  who  shall  have  been  stockholder  of  record  in  such  corpora- 
tion for  at  least  six  months  immediately  pTCPcilino'  his  demand; 
by  any  person  holding  stock  of  such  corporation  to  an  amonnt 
equal  to  five  per  centum  of  all  of  its  outstanding  shares;  or  by 


Stock  Corporation  Law.  §  34. 

any  person  tliereunto  in  writing  authorized  bj  the  holders  of  stock 
of  such  corporation  to  an  amount  equal  to  five  per  centum  of  all 
of  its  outstanding  shares.  Persons  so  entitled  to  inspect 
stock  books  may  make  extracts  therefrom.  If  any  such 
foreign  stock  corporation  has  in  this  state  a  transfer  agent, 
whether  such  agent  shall  be  a  corporation  or  a  natural  person, 
such  stock  book  may  be  deposited  in  the  office  of  such  agent  and 
shall  be  open  to  inspection  at  all  times  during  the  usual  hours  of 
transacting  business,  to  any  stocldiolder,  judgment  creditor  or 
officer  of  the  state  authorized  by  law  to  investigate  the  affairs  of 
such  corporation.  For  any  refusal  to  allow  such  book  to  be 
inspected,  such  corporation  and  the  officer  or  agent  so  refusing 
shall  each  forfeit  the  sum  of  fifty  dollars  to  be  recov- 
ered by  the  person  to  whom  such  refusal  was  made.  It  shall 
be  a  defense  to  any  action  for  penalties  under  this  section  that 
the  person  suing  therefor  has  within  two  years  sold  or  offered  for 
sale  any  list  of  stockholders  of  such  corporation  or  of  any  other 
corporation  or  has  aided  or  abetted  any  person  in  procuring  any 
stock  list  for  any  such  purpose.  Xothing  herein  impairs  the 
power  of  the  courts  to  compel  by  mandamus  or  judgment  the  pro- 
duction for  examination  by  any  stockholder  of  the  stock  books  of 
a  corporation. 

Amended  by  L.  1916,  chap.  127.     In  effect  April  3,  1916. 

§  34.    Annual  report  to  secretary  of  state. 

Every  domestic  stock  corporation  and  every  foreign  stock  cor- 
poration doing  business  within  this  state,  except  moneyed  and 
railroad  corporations,  shall  annually,  during  the  month  of  Janu- 
ary, or,  if  doing  business  without  the  United  States,  before  the 
first  day  of  May,  may  make  a  report  as  of  the  first  day  of  Janu- 
ary, which  will  state: 

1.  The  amount  of  its  capital  stock,  and  the  proportion  actually 
issued. 

2.  The  amount  of  its  debts  or  an  amount  which  they  do  not 
exceed. 

3.  The  amount  of  its  assets  or  an  amount  which  its  assets  at 
least  equal. 

4.  The  names  and  addresses  of  all  the  directors  and  officers  of 
the  company,  and  in  the  case  of  a  foreign  corporation,  the  name 
also  of  the  person  designated  in  the  manner  prescribed  by  the 


§  35.  Stock  Corpoeation  Law. 

code  of  civil  procedure,  as  a  person  upon  \vliom  process  against 
the  corporation  may  be  served  within  this  state. 

Such  report  shall  be  made  by  the  president  or  a  vice-president 
or  the  treasurer  or  a  secretary  of  the  corporation  and  shall  be 
filed  in  the  office  of  the  secretary  of  state.  If  such  report  be  not 
so  made  and  filed,  any  such  officer  who  shall  thereafter  neglect 
or  refuse  to  make  and  to  file  such  report,  within  ten  days  after 
written  request  so  to  do  shall  have  been  made  by  a  creditor  or 
by  a  stockholder  of  the  corporation,  shall  forfeit  to  the  people  the 
sum  of  fifty  dollars  for  every  day  he  shall  so  neglect  or  refuse. 

§  35.  Liability  of  officers  for  false  certificates,  reports  or 
public  notices. 

If  any  certificate  or  report  made  or  public  notice  given  by  the 
officers  or  directors  of  a  stock  corporation  shall  be  false  in  any 
material  representation,  the  officers  and  directors  signing  the  same 
shall  jointly  and  severally  be  personally  liable  to  any  person  who 
has  become  a  creditor  or  stockholder  of  the  corporation  upon  the 
faith  of  any  such  certificate,  report,  notice  or  any  material  repre- 
sentation therein  to  the  amount  of  the  debt  contracted  upon  the 
faith  thereof  if  not  paid  when  due,  or  the  damage  sustained  by 
any  purchaser  of  or  subscriber  to  its  stock  upon  the  faith  thereof. 
The  liability  imposed  by  this  section  shall  exist  in  all  oases  where 
the  contents  of  any  such  certificate,  report  or  notice  or  of  any 
material  representation  therein  shall  have  been  communicated 
either  directly  or  indirectly  to  the  person  so  becoming  a  creditor 
or  stockholder  and  he  became  such  creditor  or  stockholder  upon 
the  faith  thereof.  ]^o  action  can  be  maintained  for  a  cause  of 
action  created  by  this  section  unless  brought  within  two  years  from 
the  time  the  certificate,  report  or  public  notice  shall  have  been 
made  or  given  by  the  officers  or  directors  of  such  corporation. 


Stock  Corporation  Law.  §§  50,  51. 


AETICLE  4. 

Stock  and  Stockholders. 

Section  50.  Issue  and  transfers  of  stock. 

51.  Transfers  of  stock  by  stockholder  indebted  to  corporation. 

52.  Purchase  of  stock  of  other  corporations. 

53.  Subscriptions  to  stock. 

54.  Time  of  payment  of  subscriptions  to  stock. 

55.  Consideration  for  issue  of  stock  and  bonds. 

56.  Liabilities  of  stockholders. 

57.  liabilities  of  stockholders  to  laborers,  servants  or  employees. 

58.  Non-liability  in  certain  cases. 

59.  Limitation  of  stockholder's  liability. 

60.  Partly  paid  stock. 

61.  Preferred  and  common  stock. 

62.  Increase  or  reduction  of  capital  stock. 

63.  Notice  of  meeting  to  increase  or  reduce  capital  stock. 

64.  Conduct  of  such  meeting;  certificate  of  increase  or  reduction. 

65.  Change  in  par  value  of  shares. 

66.  Prohibited  transfers  to  officers  or  stockholders. 

certificate  of  stock. 

67.  Application   to  court   to   order   iasue   of   new   in   place   of    lot»t 

68.  Order  of  court  upon  such  application. 

69.  Financial  statement  to  stockholders. 

70.  Liabilities  of  officers,  directors  and  stockholders  of  foreign  cor 

porations. 

§  50.    Issue  and  transfers  of  stock. 

The  stock  of  every  stock  corporation  shall  be  represented  by 
(^rtificates  prepared  by  the  directors  and  signed  by  the  president 
or  vice-president  and  secretary  or  treasurer  and  sealed  with  the 
seal  of  the  corporation,  and  shall  be  transferable  in  the  manner 
])rescribed  in  this  chapter  and  in  the  by-laws.  'No  share  shall  be 
transferable  until  all  previous  calls  thereon  shall  have  been  fully 
paid  in. 

§  51.  Transfers  of  stock  by  stockholder  indebted  to 
corporation. 

If  a  stockholder  shall  be  indebted  to  the  corporation,  the  direc- 
tors may  refuse  to  consent  to  a  transfer  of  his  stock  until  such 
indebtedness  is  paid,  provided  a  copy  of  this  section  is  written  or 
printed  upon  the  certificate  of  stock. 


§§  52,  53.  Stock  Corpoeation  Law. 

§  52.    Purchase  of  stock  of  other  corporations. 

Any  stock  corporation,  domestic  or  foreign,  now  existing  or 
hereafter  organized,  except  moneyed  corporations,  may  purchase, 
acquire,  hold  and  dispose  of  the  stocks,  bonds  and  other  evidences 
of  indebtedness  of  any  corporation,  domestic  or  foreign,  and  issue 
in  exchange  therefor  its  stock,  bonds  or  other  obligations  if  author- 
ized so  to  do  by  a  provision  in  the  certificate  of  incorporation  of 
such  stock  corporation,  or  in  any  certificate  amendatory  thereof 
or  supplementary  thereto,  filed  in  pursuance  of  law,  or  if  the  cor- 
poration whose  stock  is  so  purchased,  acquired,  held  or  disposed 
of,  is  engaged  in  a  business  similar  to  that  of  such  stock  corpora- 
tion, or  engaged  in  the  manufacture,  use  or  sale  of  the  property, 
or  in  the  construction  or  operation  of  works  necessary  or  useful 
in  the  business  of  such  stock  corporation,  or  in  which  or  in  con- 
nection with  ^vliich  the  manufactured  articles,  product  or  prop- 
erty of  such  stock  corporation  are  or  may  be  used,  or  is  a 
corporation  with  which  such  stock  corporation  is  or  may  be  author- 
ized to  consolidate.  ^^Tien  any  such  corporation  shall  be  a  stock- 
holder in  any  other  corporation,  as  herein  provided,  its  president 
or  other  officers  shall  be  eligible  to  the  office  of  director  of  such 
corporation,  the  same  as  if  they  were  individually  stockholders 
therein  and  the  corporation  holding  such  stock  shall  possess  and 
exercise  in  respect  thereof,  all  the  rights,  powers  and  privileges  of 
individual  owners  or  holders  of  such  stock. 

§  53.    Subscriptions  to  stock. 

If  the  whole  capital  stock  shall  not  have  been  subscribed  at  the 
time  of  filing  the  certificate  of  incorporation,  the  directors  named 
in  the  certificate  may  open  books  of  subscription  to  fill  up  the 
capital  stock  in  such  places  and  after  giving  such  notices  as  they 
may  deem  expedient,  and  may  continue  to  receive  subscriptions 
until  the  whole  capital  stock  is  subscribed.  At  the  time  of  sub- 
scribing, every  subscriber,  whose  subscription  is  payable  in  money, 
shall  pay  to  the  directors  ten  per  centum  upon  the  amount  sub- 
scribed by  him  in  cash,  and  no  such  subscription  shall  be  received 
or  taken  without  such  payment. 


Stock  Corpoeation  Law.  §§  54,  55. 

§  54.    Time  of  payment  of  subscriptions  to  stock. 

Subscriptions  to  the  capital  stock  of  a  corporation  shall  be 
paid  at  such  times  and  in  such  instalments  as  the  board  of 
directors  may  by  resolution  require.  If  default  shall  be  made 
in  the  payment  of  any  instalment  as  required  by  such  resolution, 
the  board  may  declare  the  stock  and  all  previous  payments  thereon 
forfeited  for  the  use  of  the  corporation,  after  the  expiration  of 
sixty  days  from  the  service  on  the  defaulting  stockholder,  per- 
sonally, or  by  mail  directed  to  him  at  his  last-known  post-office 
address,  of  a  written  notice  requiring  him  to  make  payment  within 
sixty  days  from  the  service  of  the  notice  at  a  place  specified 
therein,  and  stating  that,  in  case  of  failure  to  do  so,  his  stock 
and  all  previous  payments  thereon  will  be  forfeited  for  the  use 
of  the  corporation. 

Such  stock,  if  forfeited,  may  be  reissued  or  subscriptions  there- 
for may  be  received  as  in  the  case  of  stock  not  issued  or  subscribed 
for.  If  not  sold  for  its  par  value  or  subscribed  for  within  six 
months  after  such  forfeiture,  it  shall  be  canceled  and  deducted 
from  the  amount  of  the  capital  stock.  If  by  such  cancellation, 
the  amount  of  the  capital  stock  is  reduced  below  the  minimum 
required  by  law,  the  capital  stock  shall  be  increased  to  the 
required  amount  within  three  months  thereafter  or  an  action  may 
be  brought  or  proceedings  instituted  to  close  up  the  business  of  the 
corporation  as  in  the  case  of  an  insolvent  corporation.  If  a  re- 
ceiver of  the  assets  of  the  corporation  has  been  appointed,  all 
unpaid  subscriptions  to  the  stock  shall  be  paid  at  such  times  and 
in  such  instalments  as  the  receiver  or  the  court  may  direct. 

§  55.    Consideration  for  issue  of  stock  and  bonds. 

No  corporation  shall  issue  either  stock  or  bonds  except  for 
money,  labor  done  or  property  actually  received  for  the  use  and 
lawful  purposes  of  such  corporation.  Any  corporation  may  pur- 
chase any  property  authorized  by  its  certificate  of  incorporation, 
or  necessary  for  the  use  and  lawful  purposes  of  such  corporation, 
and  may  issue  stock  to  the  amount  of  the  value  thereof  in  pay- 
ment therefor,  and  the  stock  so  issued  shall  be  full  paid  stock 
and  not  liable  to  any  further  call,  neither  shall  the  holder  thereof 


§§  56,  57.  Stock  Corpoeation  Law. 

be  liable  for  any  further  payment  under  any  of  the  provisions  of 
this  chapter;  and  in  the  absence  of  fraud  in  the  transaction  the 
judgment  of  the  directors  as  to  the  value  of  the  property  pur- 
chased shall  be  conclusive ;  and  in  all  statements  and  reports  of  the 
corporation,  by  law  required  to  be  published  or  filed,  this  stock 
shall  not  be  stated  or  reported  as  being  issued  for  cash  paid  to  the 
corporation,  but  shall  be  reported  as  issued  for  property  purchased. 

§  56.    Liabilities  of  stockholders. 

Every  holder  of  capital  stock  not  fully  paid,  in  any  stock  corpo- 
ration, shall  be  personally  liable  to  its  creditors,  to  an  amount 
equal  to  the  amount  unpaid  on  the  stock  held  by  him  for  debts  of 
the  corporation  contracted  while  such  stock  was  held  by  him.  As 
to  existing  corporations  the  liability  imposed  by  this  section  shall 
be  in  lieu  of  the  liability  imposed  upon  stockholders  of  any  exist- 
ing corporation,  under  any  general  or  special  law,  excepting  laws 
relating  to  moneyed  corporations,  and  corporations  and  associa- 
tions for  banking  purposes,  on  account  of  any  indebtedness  here- 
after contracted  or  any  stock  hereafter  issued ;  but  nothing  in  this 
section  contained  shall  create  or  increase  any  liability  of  stock- 
holders of  any  existing  corporation  under  any  general  or  special 
law. 

§  57.  Liabilities  of  stockholders  to  laborers,  servants  or 
employees. 

The  stockholders  of  every  stock  corporation  shall  jointly  and 
severally  be  personally  liable  for  all  debts  due  and  owing  to  any 
of  its  laborers,  servants  or  employees  other  than  contractors,  for 
services  performed  by  them  for  such  corporation.  Before  such 
laborer,  servant  or  employee  shall  charge  such  stockholder  for 
such  services,  he  shall  give  him  notice  in  writing,  within  thirty 
days  after  the  termination  of  such  services,  that  he  intends  to 
hold  him  liable,  and  shall  commence  an  action  therefor  within 
thirty  days  after  the  return  of  an  execution  unsatisfied  against  the 
corporation  upon  a  judgment  recovered  against  it  for  services. 


Stock  Cokpokation  Law.  §§  58-60. 

§  58.    Non-iiability  in  certain  cases. 

No  person  holding  stock  in  any  corporation  as  collateral  security, 
or  as  executor,  administrator,  guardian  or  trustee,  unless  he  shall 
have  voluntarily  invested  the  trust  funds  in  such  stock,  shall  be 
personally  subject  to  liability  as  a  stockholder;  but  the  person 
pledging  such  stock  shall  be  considered  the  holder  thereof  and  shall 
be  liable  as  stockholder,  and  the  estates  and  funds  in  the  hands  of 
such  executor,  administrator,  guardian  or  trustee  shall  be  liable  in 
the  like  manner  and  to  the  same  extent  as  the  testator  or  intestate, 
or  the  ward  or  person  interested  in  such  trust  fund  would  have 
been,  if  he  had  been  living  and  competent  to  act  and  held  the  same 
stock  in  his  otvti  name,  unless  it  appears  that  such  executor,  admin- 
istrator, guardian  or  trustee  voluntarily  invested  the  trust  funds 
in  such  stocks,  in  which  case  he  shall  be  personally  liable  as  a 
stockholder. 

§  5S.    Limitation  of  stockholder's  liability. 

No  action  shall  be  brought  against  a  stockholder  for  any  debt  of 
the  corporation  until  judgment  therefor  has  been  recovered  against 
the  corporation,  and  an  execution  thereon  has  been  returned  unsat- 
isfied in  whole  or  in  part,  and  the  amount  due  on  such  execution 
shall  be  the  amount  recoverable,  with  costs  against  the  stockholder. 
No  stockholder  shall  be  personally  liable  for  any  debt  of  the  cor- 
poration not  payable  within  two  years  from  the  time  it  is  con- 
tracted, nor  unless  an  action  for  its  collection  shall  be  brought 
against  the  corporation  within  two  years  after  the  debt  becomes 
due ;  and  no  action  shall  be  brought  against  a  stockholder  after  he 
shall  have  ceased  to  be  a  stockholder,  for  any  debt  of  the  corpora- 
tion, unless  brought  within  two  years  from  the  time  he  shall  have 
ceased  to  be  a  stockholder. 

§  60.    Partly  paid  stock. 

The  original  or  the  amended  certificate  of  incorporation  of  any 
stock  corporation  may  contain  a  provision  expressly  authorizing 
the  issue  of  the  whole  or  of  any  part  of  the  capital  stock  as  partly 
paid  stock,  subject  to  calls  thereon  until  the  whole  thereof  shall 
have  been  paid  in.     In  such  case,  if  in  or  upon  the  certificate 


§§  61,  62.  Stock  Cokpoeation  Law. 

issued  to  represent  such  stock,  the  amount  paid  thereon  shall  be 
specified,  the  holder  thereof  shall  not  be  subject  to  any  liability 
except  for  the  payment  to  the  corporation  of  the  amount  remaining 
unpaid  upon  such  stock,  and  for  the  payment  of  indebtedness 
to  employees  pursuant  to  sections  fifty-seven,  fifty-eight  and  fifty- 
nine  of  this  chapter;  and  in  any  such  case,  the  corporation  may 
declare  and  may  pay  dividends  upon  the  basis  of  the  amount 
actually  paid  upon  the  respective  shares  of  stock  instead  of  upon 
the  par  value  thereof. 

§  61.    Preferred  and  common  stock. 

Every  domestic  stock  corporation  may  issue  preferred  stock  and 
common  stock  and  different  classes  of  preferred  stock,  if  the  cer- 
tificate of  incorporation  so  provides,  or  by  the  consent  of  the  hold- 
ers of  record  of  two-thirds  of  the  capital  stock,  given  at  a  meeting 
called  for  that  purpose  upon  notice  such  as  is  required  for  the 
annual  meeting  of  the  corporation.  A  certificate  of  the  proceed- 
ings of  such  meeting,  signed  and  sworn  to  by  the  president  or  a 
vice-president,  and  by  the  secretary  or  assistant  secretary,  of  the 
corporation,  shall  be  filed  and  recorded  in  the  oflSces  where  the 
original  certificate  of  incorporation  of  such  corporation  was  filed 
and  received;  and  the  corporation  may,  upon  the  written  request 
of  the  holders  of  any  preferred  stock,  by  a  two-thirds  vote  of  its 
directors,  exchange  the  same  for  common  stock,  and  issue  cer- 
tificates for  common  stock  therefor,  upon  such  valuation  as  may 
have  been  agreed  upon  in  the  certificate  of  organization  of  such 
corporation,  or  the  issue  of  such  preferred  stock,  or  share  for 
share,  but  the  total  amount  of  such  capital  stock  shall  not  be 
increased  thereby. 

§  62.    Increase  or  reduction  of  capital  stock. 

Any  domestic  corporation  may  increase  or  reduce  its  capital 
stock  in  the  manner  herein  provided,  but  not  above  the  maximum 
or  below  the  minimum,  if  any,  prescribed  by  general  law  governing 
corporations  formed  for  similar  purposes.  If  increased,  the 
holders  of  the  additional  stock  issued  shall  be  subject  to  the  same 
liabilities  with  respect  thereto  as  are  provided  by  law  in  relation 


Stock  Coepokation  Law.  §§  63,  64. 

to  the  original  capital;  if  reduced,  tlie  amount  of  its  debts  and 
liabilities  shall  not  exceed  the  amount  of  its  reduced  capital, 
unless  an  insurance  corporation,  in  which  case  the  amount  of  its 
debts  and  liabilities  shall  not  exceed  the  amount  of  its  reduced 
capital  and  other  assets.  The  owner  of  any  stock  shall  not  be 
relieved  from  any  liability  existing  prior  to  the  reduction  of  the 
capital  stock  of  any  stock  corporation.  If  a  banking  corporation, 
whether  the  capital  be  increased  or  reduced,  its  assets  shall  at 
least  be  equal  to  its  debts  and  liabilities  and  the  capital  stock,  as 
increased  or  reduced.  A  domestic  railroad  corporation  may  in- 
crease or  reduce  its  capital  stock  in  the  manner  herein  provided, 
notwithstanding  any  provision  contained  herein,  or  in  any  genera] 
or  special  law  fixing  or  limiting  the  amount  of  capital  stock  which 
may  be  issued  by  it. 

§  63.    Notice  of  meeting  to  increase  or  reduce  capital  stock. 

Every  such  increase  or  reduction  must  be  authorized  either  by 
the  unanimous  consent  of  the  stockholders,  expressed  in  writing 
and  filed  in  the  office  of  the  secretary  of  state  and  in  the  office  of 
the  clerk  of  the  county  in  which  the  principal  business  office  of 
the  corporation  is  located,  or  by  a  vote  of  the  stockholders  owning 
at  least  a  majority  of  the  stock  of  the  corporation,  taken  at  a 
meeting  of  the  stockholders  specially  called  for  that  purpose  in  the 
manner  provided  by  law  or  by  the  by-laws.  IsTotice  of  the  meeting, 
stating  the  time,  place  and  object,  and  the  amoimt  of  the  increase 
or  reduction  proposed,  signed  by  the  president  or  a  vice-president 
and  the  secretary,  shall  be  published  once  a  week,  for  at  least  two 
successive  weeks,  in  a  newspaper  in  the  county  where  its  principal 
business  office  is  located,  if  any  is  published  therein,  and  a  copy  of 
such  notice  shall  be  duly  mailed  to  each  stockholder  or  member  at 
Wis  last-known  post-office  address  at  least  two  weeks  before  the 
meeting  or  shall  be  personally  served  on  him  at  least  loYe  days 
before  the  meeting. 

§  64.  Conduct  of  such  meeting;  certificate  of  increase  or 
reduction. 

If,  at  the  time  and  place  specified  in  the  notice,  the  stockholders 
shall  appear  in  person  or  by  proxy  in  numbers  representing  at 


§  64.  Stock  Corporation  Law. 

least  a  majority  of  all  the  shares  of  stock,  they  shall  organize  by 
choosing  from  their  number  a  chairman  and  secretary,  and  take, 
a  vote  of  those  present  in  person  or  by  proxy,  and  if  a  sufficient 
number  of  votes  shall  be  given  in  favor  of  such  increase  or  reduc- 
tion, or  if  the  same  shall  have  been  authorized  by  the  unanimous 
consent  of  stockholders  expressed  in  writing  signed  by  them  or 
their  duly  authorized  proxies,  a  certificate  of  the  proceedings  show- 
ing a  compliance  with  the  provisions  of  this  chapter,  the  amount 
of  capital  theretofore  authorized,  and  the  proportion  thereof  ac- 
tually issued,  and  the  amount  of  the  increased  or  reduced  capital 
stock,  and  in  case  of  the  reduction  of  capital  stock  the  whole 
amount  of  the  ascertained  debts  and  liabilities  of  the  corporation, 
shall  be  made,  signed,  verified  and  acknowledged  by  the  chairman 
and  secretary  of  the  meeting,  and  filed  in  the  office  of  the  clerk 
of  the  county  where  its  principal  place  of  business  shall  be  located, 
a  duplicate  thereof  in  the  office  of  the  secretary  of  state,  and,  if 
a  corporation  formed  under  or  subject  to  the  banking  law,  a  tripli- 
cate thereof  in  the  office  of  the  superintendent  of  banks,  and  if  an 
insurance  corporation,  a  triplicate  thereof  in  the  office  of  the 
superintendent  of  insurance.  In  case  of  a  reduction  of 
the  capital  stock,  except  of  a  railroad  corporation  or  a 
moneyed  corporation,  such  certificate  or  consent  hereinafter 
provided  for  shall  have  indorsed  thereon  the  approval  of  the 
comptroller,  to'  the  effect  that  the  reduced  capital  is  sufficient  for 
the  proper  purposes  of  the  corporation,  and  is  in  excess  of  its 
ascertained  debts  and  liabilities;  and  in  case  of  the  increase  or 
reduction  of  the  capital  stock  of  a  railroad  corporation  or  a 
moneyed  corporation,  the  certificate  or  the  unanimous  consent  of 
stockholders,  as  the  case  may  be,  shall  have  indorsed  thereon  the 
approval  of  the  public  service  commission  having  jurisdiction 
thereof,  if  a  railroad  corporation ;  of  the  superintendent  of  banks, 
if  a  corporation  formed  under  or  subject  to  the  banking  law,  and 
of  the  superintendent  of  insurance,  if  an  insurance  corporation. 
When  the  certificate  herein  provided  for,  or  the  unanimous  consent 
of  stockholders  in  writing,  signed  by  them  or  their  duly  author- 
ized proxies,  approved  as  aforesaid,  has  been  filed,  the  capital  stock 
of  such  corporation  shall  be  increased  or  reduced,  as  the  case  may 
be,  to  the  amount  specified  in  such  certificate  or  consent.     The 


Stock  Corporation  Law.  §§  65,  66. 

proceedings  of  the  meeting  at  which  such  increase  or  reduction  is 
voted,  or,  if  such  increase  or  reduction  shall  have  been  authorized 
by  unanimous  consent  without  a  meeting,  then  a  copy  of  such  con- 
sent shall  be  entered  upon  the  minutes  of  the  corporation.  If  the 
capital  stock  is  reduced,  the  amount  of  capital  over  and  above  the 
amount  of  the  reduced  capital  shall,  if  the  meeting  or  consents  so 
determine  or  provide,  be  returned  to  the  stockholders  pro  rata,  at 
such  times  and  in  such  manner  as  the  directors  shall  determine, 
except  in  the  case  of  the  reduction  of  the  capital  stock  of  an  insur- 
ance corporation,  as  an  alternative  to  make  good  an  existing 
Impairment. 
Amended  by  L.  1913,  cTiap.  305. 

§  65.    Change  in  par  value  of  shares. 

The  number  of  shares  into  which  the  capital  stock  of  any  stock 
corporation  is  divided  may  be  increased  or  reduced  by  a  two-thirds 
vote  of  all  stock  duly  represented  at  a  meeting  held  and  conducted 
in  like  manner,  and  upon  filing  a  like  certificate,  as  required  for 
the  increase  or  reduction  of  its  capital  stock.  If  such  increase  or 
reduction  of  the  number  of  shares  be  so  authorized,  the  corpora- 
tion shall  issue  to  each  stockholder  certificates  for  as  many  shares 
of  the  new  stock  as  equal  in  par  value  the  shares  of  the  old  stock 
held  by  him,  upon  surrender  and  cancellation  of  such  old  stock. 
This  section  does  not  authorize  the  increase  or  reduction  of  the 
capital  stock  of  such  corporation. 

§  66.    Prohibited  transfers  to  officers  or  stockholders. 

Ko  corporation  which  shall  have  refused  to  pay  any  of  its  not/es 
or  other  obligations,  when  due,  in  lawful  money  of  the  United 
States,  nor  any  of  its  ofiicers  or  directors,  shall  transfer  any  of  its 
property  to  any  of  its  ofiicers,  directors  or  stockholders,  directly 
or  indirectly,  for  the  payment  of  any  debt,  or  upon  any  other 
consideration  than  the  full  value  of  the  property  paid  in  cash. 
No  conveyance,  assignment  or  transfer  of  any  property  of  any 
snch  corporation  by  it  or  by  any  officer,  director  or  stockholder 
thoroof,  nor  nny  payment  made,  judgment  suffered,  lien  created 
or  ^opnrity  given  by  it  or  by  any  officer,  director  or  stockholder 


§  6Y.  Stock  Corporation  Law. 

when  the  corporation  is  insolvent  or  its  insolvency  is  imminent, 
with  the  intent  of  giving  a  preference  to  any  particular  creditor 
over  other  creditors  of  the  corporation,  shall  be  valid,  except  that 
laborers'  wages  for  services  shall  be  preferred  claims  and  be  enti- 
tled to  payment  before  any  other  creditors  out  of  the  corporation 
assets  in  excess  of  valid  prior  liens  or  incumbrances.  TTo  corpora- 
tion formod  under  or  subject  to  the  banking,  insurance  or  rail- 
road law  slinll  make  any  assignment  in  contemplation  of  insolv- 
ency. Every  person  receiving  by  means  of  any  such  prohib- 
ited act  or  deed  any  property  of  the  corporation  shall  be  bound 
to  account  therefor  to  its  creditors  or  stockholders  or  other  trus- 
tees. Ko  stockholder  of  any  such  corporation  shall  make  any 
transfer  or  assignment  of  his  stock  therein  to  any  person  in  con- 
templation of  its  insolvency.  Every  transfer  or  assignment  or 
other  act  done  in  violation  of  the  foregoing  provisions  of  this 
section  shall  be  void,  l^o  conveyance,  assignment  or  transfer  of 
any  property  of  a  corporation  formed  under  or  subject  to  the 
banking  law,  exceeding  in  value  one  thousand  dollars,  shall  be 
made  by  such  corporation,  or  by  any  officer  or  director  thereof, 
unless  authorized  by  previous  resolution  of  its  board  of  directors, 
except  promissory  notes  or  other  evidences  of  debt  issued  or 
received  by  the  officers  of  the  corporation  in  the  transaction  of 
its  ordinary  business,  and  except  payments  in  specie  or  other 
current  money  or  in  bank  bills  made  by  such  officers,  ^o  such 
conveyance,  assignment  or  transfer  shall  be  void  in  the  hands  of 
a  purchaser  for  a  valuable  consideration  without  notice.  Every 
director  or  officer  of  a  corporation  v^ho  shall  violate  or  be  concerned 
in  violating  any  provisions  of  this  section,  shall  be  personally 
liable  to  the  creditors  and  stockholders  of  the  corporation  of  which 
he  shall  be  director  or  an  officer  to  the  full  extent  of  any 
loss  they  may  respectively  sustain  by  such  violation. 

§  67.  Application  to  court  to  order  issue  of  new  in  place  of 
lost  certificate  of  stock. 

The  owner  of  a  lost  or  destroyed  certificate  of  stock,  if  the  cor- 
poration shall  refuse  to  issue  a  new  certificate  in  place  thereof, 
may  apply  to  the  supreme  court,  at  any  special  term  held  in  tlie 


Stock  Corpoeation  Law.  §  68. 

district  where  he  resides,  or  in  which  the  principal  business  office 
of  the  corporation  is  located,  for  an  order  requiring  the  corpora- 
tion to  show  cause  why  it  should  not  be  required  to  issue  a  new 
certificate  in  place  of  the  one  lost  or  destroyed.  The  application 
shall  be  by  petition,  duly  verified  by  the  owner,  stating  the  name 
of  tlie  corporation,  the  number  and  date  of  the  certificate,  if  known, 
or  if  it  can  be  ascertained  by  the  petitioner ;  the  number  of  shares 
named  therein,  to  whom  issued,  and  as  particular  a  statement  of 
the  circumstances  attending  such  loss  or  destruction  as  the  peti- 
tioner can  give.  Upon  the  presentation  of  the  petition  the  court 
shall  make  an  order  requiring  the  corporation  to  show  cause,  at  a 
time  and  place  therein  mentioned,  why  it  should  not  issue  a  new 
certificate  of  stock  in  place  of  the  one  described  in  the  petition. 
A  copy  of  the  petition  and  order  shall  be  served  on  the  president 
or  other  head  of  the  corporation,  or  on  the  secretary  or  treasurer 
thereof,  personally,  at  least  ten  days  before  the  time  for  showing 
cause. 

§  68.    Order  of  court  upon  such  application. 

Upon  the  return  of  the  order,  with  proof  of  due  service  thereof, 
the  court  shall,  in  a  summary  manner,  and  in  such  mode  as  it  may 
deem  advisable,  inquire  into  the  truth  of  the  facts  stated  in  the 
petition,  and  hear  the  proofs  and  allegations  of  the  parties  in 
regard  thereto,  and  if  satisfied  that  the  petitioner  is  the  lawful 
owner  of  the  number  of  shares,  or  any  part  thereof,  described  in 
the  petition,  and  that  the  certificate  therefor  has  been  lost  ol- 
dest royed,  and  can  not  after  due  diligence  be  found,  and  that  no 
sufficient  cause  has  been  shown  why.  a  new  certificate  should  not 
be  issued,  it  shall  make  an  order  requiring  the  corporation,  within 
such  time  as  shall  be  therein  designated,  to  issue  and  deliver  to 
the  petitioner  a  new  certificate  for  the  number  of  shares  specified 
in  the  order,  upon  depositing  such  security,  or  filing  a  bond  in 
such  form  and  with  such  sureties  as  to  the  court  shall  appear  suf- 
ficient to  indemnify  any  person  other  than  the  petitioner  who 
shall  thereafter  be  found  to  be  the  lawful  o^vner  of  the  certificate 
lost  or  destroyed ;  but  such  provision  requiring  security  to  be  de- 
posited or  bond  filed  is  to  be  construed  as  excluding  an  application 


§69.  Stock  Coepoeation  Law. 

made  by  a  domestic  municipal  corporation  or  by  a  public  officer 
in  bebalf  of  such  corporation;  and  the  court  may  direct  the  pub- 
lication of  such  notice,  either  before  or  after  making  such  order 
as  it  shall  deem  proper.  Any  person  claiming  any  rights  under 
the  certificates  alleged  to  have  been  lost  or  destroyed  shall  have 
recourse  to  such  indemnity,  but  in  any  application  imder  the  pro- 
visions of  this  chapter,  in  which  a  domestic  municipal  corpora- 
tion or  a  public  officer  in  behalf  of  such  corporation,  shall  be  by 
the  foregoing  provisions  of  this  section  excused  from  depositing 
security  or  filing  a  bond,  such  municipal  corporation  shall  be  liable 
for  all  damages  that  may  be  sustained  by  any  person,  in  the  same 
case  and  to  the  same  extent  as  sureties  to  a  bond  or  undertaking 
would  have  been,  if  such  a  bond  or  undertaking  had  been  filed; 
and  the  corporation  issuing  such  certificate  shall  be  discharged 
from  all  liability  to  such  person  upon  compliance  with  such  order ; 
and  obedience  to  the  order  may  be  enforced  by  attachment  against 
thie  officer  or  officers  of  the  corporation  on  proof  of  his  or  their 
refusal  to  comply  with  it 

§  69.    Financial  statement  to  stockholders. 

Stockholders  owning  ^ve  per  centum  of  the  capital  stock  of  any 
corporation  other  than  a  moneyed  corporation,  not  exceeding  one 
hundred  thousand  dollars,  or  three  per  centum  where  it  exceeds 
one  hundred  thousand  dollars,  may  make  a  written  request  to  the 
treasurer  or  chief  fiscal  officer  thereof,  for  a  statement  of  its 
affairs,  under  oath,  embracing  a  particular  account  of  all  its 
assets  and  liabilities,  and  the  treasurer  shall  make  such  statement 
and  deliver  it  to  the  person  presenting  the  request  within  thirty 
days  thereafter,  and  keep  on  file  for  twelve  months  thereafter  a 
copy  of  such  statement,  which  shall  at  all  times  during  business 
hours  be  exhibited  to  any  stockholder  demanding  an  examination 
thereof;  but  the  treasurer  or  such  chief  fiscal  officer  shall  not  be 
required  to  deliver  more  than  one  such  statement  in  any  one  year. 
The  supreme  court,  or  any  justice  thereof,  may  upon  application, 
for  good  cause  shown,  extend  the  time  for  making  and  delivering 
such  certificate.  For  every  neglect  or  refusal  of  the  treasurer  or 
other  chief  fiscal  officer  thereof  to  comply  with  the  provisions  of 


Stock  Cokpokation  Law.  §§  70-81. 

this  section  he  shall  forfeit  and  pay  to  the  person  making  such 
request  the  sum  of  fifty  dollars,  and  the  further  sum  of  ten 
dollars  for  every  twenty-four  hours  thereafter  until  such  state- 
ment shall  be  furnished. 

§  70.  Liabilities  of  officers,  directors  and  stockholders  of 
foreign  corporations. 

Except  as  otherwise  provided  in  this  chapter  the  officers,  direo 
tors  and  stockholders  of  a  foreign  stock  corporation  transacting 
business  in  this  state,  except  moneyed  and  railroad  corporations, 
shall  be  liable  under  the  provisions  of  this  chapter,  in  the  same 
manner  and  to  the  same  extent  as  the  officers,  directors  and  stock- 
holders of  a  domestic  corporation,  for : 

1.  The  making  of  unauthorized  dividends ; 

2.  Unlawful  loans  to  stockholders; 

3.  Making  false  certificates,  reports  or  public  notices; 

4.  An  illegal  transfer  of  the  stock  and  property  of  such  cor- 
poration, when  it  is  insolvent  or  its  insolvency  is  threatened ; 

5.  The  failure  to  file  an  annual  report 

Such  liabilities  may  be  enforced  in  the  courts  of  this  state,  in 
the  same  manner  as  similar  liabilities  imposed  by  law  upon  the 
officers,  directors  and  stockholders  of  domestic  corporations. 

AKTICLE  5. 

Laws  Repealed  ;  Whei^  to  Taxe  Effect. 

Sectiow  80.    Laws  repealed. 

81.    Wlien  to  take  effect. 

§  80.    Laws  repealed. 

Of  the  laws  enumerated  in  the  schedule  hereto  annexed,  that 
portion  specified  in  the  last  column  is  hereby  repealed. 

§  81.    When  to  take  effect. 

This  chapter  shall  take  effect  immediately. 


GENERAL  INDEX 

(References  are  to  sectiona.) 


Acceptance: 

of  candidates,  to  be  filed  with  certificate  of  nomination 94 

Accidents: 

Insurance  against    70 

standard  provisions 107 

Accident   Insurance: 

agents  for  91a 

Accident  Insurance  Corporations  (see  Life,  Health  and  Casualty  Insurance 
Corporations) : 

incorporation  of   70 

assets  of  88 

standard  provisions 107 

discriminations  prohibited 108 

Accountants: 

at  election,  how  appointed 04 

to  determine  verification  of  ballots 94 

Accumulation  JBasis: 

fraternal  benefit  societies 243 

Actions: 

against  foreign  insurance  corporation,  service  of  process  on  superin- 
tendent    29 

effect  of  removal  to  federal  courts 30 

Accumulation: 

of  contingency  reserve 87 

of  reserve  or  emergency  fund  by  co-operative  company 206 

Actuary: 

to  be  appointed  by  receiver 77 

investigation  by  77 

report  of  77 

to  make  annual  inve'stigation  of  insolvent  corporation 79 

appointment  of,  by  receiver 81 

compensation  of 81 

Administration  Ticket: 

definition  of 94 

Advance  premiums: 

fire  insurance  companies  (see  Co-operative  Fire  Insurance  Corporations) : 

limitation  on  business 262 

subject  of  insurance  by 267 

expense  of  managment 267 

liability  to  be  carried 267 

surplus 267 

deficiency 267 

reinsurance  of  risk 267 


General  Index. 

(References  are  to  sections.) 
Advertisement: 

deceptive  statements   by  insurance  corporations 47 

by  insurance  corporations,  contents  of 48 

contents  of,  by  insurance  companies 49 

Affidavit: 

to  be  affixed  with  bonds  and  mortgages  deposited 13 

of  agent  as  to  notice  of  premium 92 

of  notices  of  assessment  of  fraternal  beneficiary  society 238 

Agents: 

not  to  transact  business  for  foreign  corporation  until  certificate  of 

authority  is  filed 31,  149b 

fiduciary   capacity   of 38 

shall  aid  in  the  examination  of  corporation 39 

shall  state  certain  matters  in  advertisements 49 

definition   of    49 

for  foreign  corporation,  certificate  of  authority  of 50 

penalty  for  improper  acts  of 50 

not  to  act  for  unauthorized  corporations 54 

not  to  transact  business  under  fictitious  name 54 

not  to  be  agent  of  insured 69 

inducing  person  to  surrender  insurance 60 

presents  by 65 

can  make  only  contract  expressed  in  policy 89 

certificate  of  authority  of 91 

certificate  of  authority  of,  must  be  renewed  annually 91 

of  industrial  and  prudential  companies 91 

certificate  of  authority  of,  may  be  revoked 91 

for  health   or  accident  insurance 91a 

not  to  omit  name  of  policyholder  from  list 94 

not  to  advance  money  for  elections 94 

not  to  solicit  votes  during  working  hours 94 

of  life  insurance  corporations,  salaries  of 98 

license  to,  in  certain  csises 137 

not  to  act  for  foreign  fire  corporation  until  payment  of  taxes 139 

of  foreign  fire  corporation,  undertaking  of 134 

neglect  to  pay  tax 135 

certificate  of  authority 142 

of  fire  insurance  companies  to  report  consideration 145 

penalties  for  violation,  provisions  of 144-147,  148 

not  to  receive  excessive  rate  for  insurance  upon  canals 160 

penalty  for  receiving  excessive  rates 160 

of  marine  corporations  outside  of  United  States 161 

power  of  title  guaranty  companies  to  act  as 180 

Amendment: 

of  charter  of  marine  corporation 167 

of  constitution  and  by-laws  of  fraternal  beneficiary  society 241 


General  Index. 

(References  are  to  sections.) 

Amount  of  risk: 

that  may  be  assumed 24 

Annual  Election: 

town    co-operative    corporation 272 

Annual  Meeting: 

of  co-operative  or  assessment  corporation 209 

of  governing  body  of  fraternal  society 238 

of  company  to  insure  domestic  animals 251 

of  co-operative  fire  insurance  corporations 264 

Annual  Report: 

fee  for  filing fl 

of   certain    corporations 44 

forms  of,  to  be  furnished  by  superintendent 45 

to  exhibit  amount  of  capital  notes 45 

of  foreign   insurance   company 45 

penalty  for  failure  to  file 45 

of   superintendent    46 

of  registered  policies  and  annuity  bonds 74 

of  life  insurance  corporation 103 

of  life  insurance  corporation,  contents  of 103 

of  foreign  mutual  fire  insurance  corporation 149a 

by  marine  corporations,  of  agencies  outside  of  United  States 161 

fraternal  beneficiary  society,  contents  of 242 

of  fraternal  beneficiary  society 242 

of  company  to  insure  domestic  animals 252 

of  town  insurance  corporation 344 

Annuities: 

certain,  how  valued 84 

provisions  concerning  contract  for  insurance  and  annuity 88 

deferred,  non-payment  of  premiums 88 

Annuity  Bonds: 

special  deposit  to  secure 73 

annual   report  of 74 

liability  of  State  to  pay 74 

registration   of    76 

payment  of    77 

Application: 

of  article  I 57 

of  other  sections,  fraternal  beneficiary  society 248 

Articles  of  Incorporation  (see  Incorporation). 

Articles  of  Association: 

of  Lloyds,  to  be  filed 67 

of  Lloyds,  contents  of 67 

Assessment: 

of  corporations  to  defray  expenses  of  insurance  department 8 

on  premium  notes  by  receiver 61 

in  mutual  fire  insurance  corporations 116 

to  be  made  by  directors 116 

notice  of  116 


General  Index. 

(References  are  to  sections.) 
Assessment  —  (Continued) : 

effect  of  notice  of 116 

of  mutual  employers'  liability  corporations 189 

of    workmen's    compensation    corporations 189 

in  co-operative  or  assessment  insurance  corporations 210 

policy  to  indicate  plan 219 

of  members  of  company  to  insure  domestic  animals 254 

by  co-operative  fire  insurance  corporations 264 

collection  of  unpaid,  town  co-operative  corporation 270 

town  insurance  corporations  may  make 337 

assessment  fire  insurance  corporations    (see  Co-operative  Fire  Insur- 
ance corporations), 
form 262 

subject  of  insurance  by 266 

classification  of  property 266 

may  borrow 266 

mutual  automobile  fire  insurance  corporations 326 

mutual  automobile  casualty  insurance  corporations 346 

Assets: 

sufficiency  of   21 

when  stock  is  not  valued  as  an  asset  of 21 

on   reinsurance    23 

of  foreign  corporation 25 

receiver  to  take  possession  of 76 

what  shall  be  allowed  as 86 

of  fire  insurance  corporations,  allowance  of 118 

certain  documents  not  to  be  considered  as 132 

Assignee  of  Policy: 

when  allowed  to  vote  for  directors  of  life  insurance  corporation 94 

Associations: 

rate-making 141 

Attorney-General : 

certificate  of  authority  to  be  approved  by 10 

consent  of,  to  reinsurance  by  receiver 23 

report  of  superintendent  to,  as  to  insolvency  of  corporation 76 

proceedings   to  restrain   co-operative   company   from   doing   business 
by 207,  208 

Anthority,  Certificate  of  (see  Certificate  of  Authority). 

Automobiles: 

incorporation  of  companies  to  insure 110,  160 

Bankrupt  Corporation  (see  Insolvency). 
Bankers: 

indemnifying 70 

Banks: 

indemnifying 70 

Beneficiary: 

of  co-operative  or  assessment  company,  charge  of 211 

payment  to,  is  exempt  from  execution 212 


General  Index. 

(References  axe  to  sections.) 
Benefits: 

agreements  for 210 

of  fraternal  society,  to  whom  payable 231 

certificate  of,  what  to  contain 232 

Board  of  Directors  (see  Directors). 

Boiler: 

inspection  of  357 

Bonds  (see  Undertaking): 

deposit  of   13 

minimum   amount    of 13 

affidavit  annexed  to  deposit  of 13 

valuation  of  18 

deposit  of,  in  certain  cases 28 

insurance  of  municipal,  etc.,  validity  of 70 

of  receiver    76 

title  guaranty  companies  may  execute 181 

title  guaranty  companies,  justification  upon 183 

Books  (see  Documents): 

to  record  exchange  of  securities  deposited 15 

of   foreign   corporation 25 

to  be  produced  for  examination 39 

when  to  be  opened  for  subscriptions • 71 

in  department,  access  of  State  Treasurer  to 74 

of  fire  insurance  corporations,  opening  of 112 

Bottomry  Interests: 

marine  insurance  upon 150 

Broker: 

present  by  agent  or H5 

certificate  of  authority  of 91-142 

indemnifying 70 

Building: 

inspection  by  State  Fire  Marshal 36U 

Burglary  or  Theft: 

insurance  against  loss  by 70 

Business  (see  New  Business): 

By-Laws: 

to  be  indorsed  on  certificate  of  stock  or  profits 19 

of  title  and  credit  guaranty  corporations,  adoption  of 171 

contents  of  172 

copy  of,  to  be  filed  with  superintendent 173 

amendment  of,  to  be  filed  with  superintendent 173 

of  fraternal  beneficiary  society,  amendments  to 241 

of  co-operative  fire  insurance  corporations 264 

Canals: 

insurance  upon,  by  marine  corporations 160 

agent  not  to  receive  excessive  rate  for  insurance  upon 160 


General  Index. 

(References  are  to  sections.) 

Cancellation: 

of  policy  of  fire  insurance  corporation 122 

of  policies,  by  co-operative  fire  insurance  corporations 264 

Capital  (see  Capital  Stock;   Impairment  of  Capital): 

investment  of 16 

percentage  of,  to  be  exposed  to  loss 24 

of  corporation  of  foreign  country 27 

of  foreign  country  corporation,  taxation  of 27 

of  foreign  corporation  subject  to  taxation 34 

of  insurance  corporation  heretofore  incorporated 37 

impairment  of   41 

of  corporation  to  be  stated  in  advertisement 48 

of  fire  insurance  corporations 112 

cash  capital  of  mutual  fire  insurance  corporation 114 

of  title  guaranty  company,  investment  of 176 

Capital  Stock  (see  Capital): 

minimum   amount    12 

of  life,  health  and  casualty  corporations  to  be  paid  in 71 

to  be  computed  as  liability  of  corporation 82 

impairment  of,  of  life  insurance  corporation 86 

plan  of  retirement  of 95 

of  mutual  fire  insurance  corporation Ill 

of  fire  insurance  corporation,  increase  of 117 

of   marine  corporation 161 

of  marine  corporation,  restrictions  as  to 152 

of  mutual  marine  company,  increase  of 153 

cash  capital  of  mutual  marine  corporations 154 

rights  and  liabilities  of  holders  of  cash  capital 155 

subscriptions  to,  of  title  and  credit  guaranty  corporation 171 

of  title  and  credit  guaranty  corporations,  certificate  of  payment  of. ..  174 

of  credit  guaranty  corporations,  use  of 178 

Capital  Stock  Notes: 

of  mutual  fire  insurance  corporations 113 

Caps: 

not  kept  in  magazines 362 

Cargoes: 

insurance  upon   110 

Cash  Pajonent: 

to  mutual  fire  company,  in  lieu  of  deposit  note 115,  119 

Casualty: 

insurance  against 70 

Casualty  Insurance  Corporations: 

fees  for  filing  charter  of 0 

fees  for  filing  report  of 6 

minimum  capital  stock  of 12 

proceedings  against,  liquidation  of  delinquent 63 

assets    of    80 

estimation   of  liabilities   of 89 


GENETtA-L  Index. 

(References  are  to  sections.) 

Casualty  Insurance  Corporations —  (Continued). 

increased  powers  of 105 

reincorporation  of  certain 217 

See  Life,  Health  and  Casualty  Insurance  Corporations. 

Certificates: 

fee  for  filing 6 

to  extend  time  for  deration  for  holding  real  property 20 

of  indebtedness  issued  by  receiver 123 

of  profits  of  marine  corporation  convertible  into  stock 156,  159 

of  payment  of  capital  stock  of  title  and  credit  guaranty  corporations,  174 

life,  must  be  filed  and  approved 220 

of  authority  of  co-operative  fire  insurance  corporations 263 

of  right  to  continue  as  a  co-operative  fire  insurance  corporation 260 

of  right  of  voluntary  association  to  continue  a  co-operative  fire  insur- 
ance   corporation 261 

4 

Certificate  of  Attorney-General   (see  Attorney-General). 

Certificate  of  Authority: 

fees  for  filing • 

issuance   by   superintendent 9 

no  corporation  to  transact  business  without • 

recording  of  9 

must  specify  business  to  be  transacted 9 

superintendent  may  refuse  to  issue. 9 

not  required  by  certain  corporations 9 

to  bb  approved  by  Attorney-General 10 

when  not  to  be  issued 10 

of  foreign  corporation 26 

revocation  of,  on  account  of  removal 30 

to  be  filed  in  county  clerk's  oflSce  by  agent 31 

renewal  of,  revocation  of 32 

revocation  of,  on  account  of  impairment  of  capital 41 

of  agent  for  foreign  corporation 50 

of  life  insurance  corporation,  revocation  of,  for  impairment  of  capital 

stock 86 

of  agent,  when  revoked 91 

of  agents 91 

must  be  renewed  annually 91 

not  required  of  industrial  or  prudential  companies 91 

of  public  adjuster 138-a 

agent's 142 

broker's 143 

of  foreign  mutual  fire  insurance  corporation " 14? 

of  co-operative  company,  revocation  of 213 


General  Index. 

(Referecces  are  to  sections.) 

Certificate  of  Examiners  (see  Examiners). 

Certificate  of  Incorporation  (see  Incorporation): 

to  be  examined  by  Attorney-General 10 

of  domestic  corporation,  to  contain  certain  provisions 10 

amendment  of  52 

Certificate  of  Nomination: 

to  have  acceptance  of  candidates 94 

Certificate,  Suspension,  Cancellation  and  Reinstatement  of: 

in  mutual  employers'  liability  corporations 101 

in  workmen's  compensation  corporations 191 

Certificate  of  Solvency: 

issued  by  superintendent  of  insurance 182 

Charter: 

fees  for  filing  of 6 

of  foreign  corporation,  to  be  filed 29 

amendment  of  52 

effect   of  amendment  of 52 

of  fire  insurance  corporation 110 

forfeiture  of,  by  declaring  improper  dividends 117 

amendment  of,  by  mutual  fire  company,  to  change  to  stock  company . .  125 

of  mutual  fire  company,  extension  of 126 

amendment  of,  to  reincorporate  existing  fire  corporation 127 

of  fire  insurance  corporation,  duration  of 128 

of  marine  insurance  corporation 150 

of  marine  corporation,  duration  of 150 

of  marine  corporation,  amendment  of 157 

of  marine  corporation,  extension  of 158 

Children: 

insurance  of,  by  a  person  liable  for  support  of 55 

City: 

no  insurance  in,  by  town  co-operative  corporation 271 

City  Bonds: 

investments  in    16 

Claim  Reserves: 

for   liability   companies 86 

Clerks: 

appointment  of  6 

compensation  of   6 

duties  of 6 

no  charge  for  examination  of  corporation  by 7 

of  receiver,  appointment  of  81 

of  receiver,  compensation  of 81 

Colored  Persons: 

discriminations  against,  prohibited W 


General  Index. 

(References  are  to  sections.) 
Comptroller 

certificate  of,  as  to  deposit  of  securities 25 

Committee  of  Policyholden: 

at  elections  94 

Completion  of  Organization: 

of  mutual  automobile  fire  insurance  corporations 320 

of  mutual  automobile  casualty  insurance  corporations 340 

Concealing: 

envelope  or  ballot  from  custodians  or  inspectors 94 

Conflagrations: 

proceedings  in  case  of  extensive 132 

Consolidation  (see  Merger): 

of  fire  corporations , 129 

Constitution: 

amendment  to,  of  fraternal  beneficiary  society 241 

Contingency  Reserve: 

accumulation  of,  by  life  insurance  corporation 87 

Contracts: 

insurance  guaranteeing  performance  of 70 

Conversion: 

of  a  stock  life  insurance  to  a  mutual  corporation 96 

Co-operative  Fire  Insurance  Corporations: 

existing  corporations  continued 260 

certificate  from  superintendent 260 

voluntary   associations   continued   and   incorporated 261 

certificate  from  superintendent 261 

co-operative  fire  insurance  corporations 262 

subject  of  insurance 262 

form  of  insurance 262 

limitation  on  business  of  advance  premium  companies 262 

assessment  corporations 262 

incorporation    and    certificate    of    incorporation 263 

by-laws 264 

directors 264 

annual  meetings 264 

records 204 

assessments 264 

withdrawal  of  members 264 

new  members 264 

non-residents   may   be    insured 264 

policies 265 

property   to   be   insured   by 266 

assessment  companies 266 

classification  of  property  by  assessment  companies 266 

assessment  company  may  borrow 266 

advance  premium  companies  may  insure 267 

expenses  of  such  company 207 

liability  carried • 267 


General  Index. 
(References  are  to  sections.) 

Co-operative  Fire  Insurance  Corporations  —  (Continued) : 

surplus  of  such  company 267 

deficiency 267 

reinsure    by    such    company 267 

application  of  other  sections 268 

extension  of  corporate   existence 269 

Co-operative  or  Assessment  Insurance  Corporations  (see  Insurance  Cor- 
porations) : 

fees  for  filing  charter  of • 

fees  for  filing  report  of 0 

reincorporation   of    52 

incorporation  of   200 

contents  of  declaration  of 200 

election  of  directors   of 200 

number  of  members  required 200 

declaration  to  contain  statement  as  to  members 200 

license  to  commence  business 200 

what  are   deemed 201,  209 

annual   report   of 202 

no  deposit  of  securities  required  by 202 

designation  of  principal  office  of 203 

designation  of  person  on  whom  to  serve  process 203 

foreign  companies    204 

restriction    on    foreign 204 

accumulation  of  reserve  or  emergency  fund 205 

use  of  reserve  fund 205 

reserve  or  emergency  f \md  of  foreign  company 205 

authority  of  foreign  company  may  be  revoked 205 

reincorporation  of    206 

visitation  of,  by  superintendent 207 

replies  to  superintendent  to  be  under  oath 207 

proceedings  to  restrain  from  doing  business 207 

hearing  on  such  proceeding 208 

annual  meetings  of 209 

examinations  of   209 

transfers  of  risks  of 209 

reinsurance   by    , 209 

payment  of  maximum  amount  of  policy 210 

assessments  in 210 

notice    of   assessments 210 

contents  of  notice  of  assessment 210 

change  of  beneficiary 211 

payment  to  beneficiary  is  exempt  from  execution 212 

penalties     213 

proceedings  against,  liquidation  of  delinquent 63 

revocation  of  certificate  of  authority  of 213 

Odd  Fellows  and  Masons 214 

deposit  of  securities  with  superintendent 215 


General  Index. 

(References  are  to  sections.) 

Co-operative  or  Assessment  Insurance  Corporations   (see  Insurance  Cor- 
porations) —  Continued: 

quorum  of  members  of 2IQ 

reincorporation  of  certain 217 

Corporation: 

heretofore  incorporated,  privileges  of 31 

inducing  person  to  surrender  insurance 60 

proceedings  against  and  liquidation  of  delinquent  insurance 03 

increase  powers  certain  corporations 105 

license  to,  in  excepted  cases 138 

reports  Appendix 

reports,   further    requirements Appendix 

Corporators: 

of  fire  corporations,  liability  of 118 

Cost  of  Insurance: 

fraternal  benefit  societies ^i'iS 

County  Co-operative  Insurance  Companies  (see  Co-operative  oi  Assess- 
ment Insurance  Companies). 

County  Co-operative  Insurance  Corporations: 

see  town  or  county  co-operative  insurance  corporations 57 

County  Clerk: 

certificate  of  authority  of  broker  to  be  filed  vith 91 

to  furnish  lists  to  State  Fire  Marshal 377 

(Jourt  of  Record: 

may  strike  out  name  of  candidate 04 

Credit: 

insurance  against  loss  from .....,., 70 

Credit  Guaranty  Corporations: 

proceedings  against,  liquidation  of  delinquent .  63 

incorporation  of 170 

certificate  of  incorporation  of 170 

amount  of  capital  of 170 

subscription  to  capital  stock  of 171 

adoption  of  by-laws  of 171 

meeting  to  adopt  by-laws 171 

contents  of  by-laws  of 172 

copy  of  by-laws  to  be  filed  with  superintendent 173 

amendment  of  by-laws  to  be  filed  with  superintendent 173 

certificate  of  payment  of  capital  stock 174 

directors  of,  to  be  stockholders 175 

number  of  directors  of 176 

quorum  of  directors 176 

treasurer  of,  to  give  bonds 175 

change  of  number  of  directors  of 175 

conditions  requisite  to  commencing  business  as 177 

powers  of  , , , 178 


General  Index. 

(References  are  to  sections.) 

Credit  Guaranty  Corporations — (Continued): 

uses  of  capital  funds 178 

estimation  of  lia;bilities  of 178 

examination  into  affairs  of 178 

Creditor: 

may  request  examination  of  corporation 40 

Custodians: 

of  ballots,  how  appointed 94 

Damage: 

umpire  to  ascertain,  fire 121-a 

Deceptive  Statements: 

not  to  be  made  by  advertisement 47 

penalty  for  making 48 

Declarations: 

of  fire  insurance  corporations 110 

of  marine  insurance  corporations 150 

of  co-operative  or  assessment  insurance  corporations 200 

Definitions: 

of  agent    49 

of  fraternal  benefit  societies 230 

of  explosives 358 

Delinquent  Corporations: 

proceedings  against  and  liquidation  of 63 

Deposit: 

by  credit  guaranty   corporation 177 

Deposit  Notes: 

of  mutual  fire  insurance  corporation 113,  115 

payment  of   113,  115 

relinquishment  of   113,  115 

deposit  of,  by  members  of  mutual  companies 115 

assessments  on   116 

liability  of  member  on 116 

cash  payment  in  lieu  of 116 

Deposit  of  Securities: 

before  receiving  certificate  of  authority 11 

to  be  made  in  stocks,  bonds  and  mortgages 13 

deposit  by  foreign  corporations 13 

stocks  and  bonds  for  foreign  States 13 

exchange  of    14 

interest  on    14 

by  foreign  corporation 26 

amount  of,  by  foreign  corporation 26 


General  Index. 

(Keferences  are  to  sections.) 

Deposit  of  Securities  —  (Continued) : 

by  foreign  country  corporation 27 

voluntary  deposit  by  foreign  country  corporation 27 

special  deposits  required  in  certain  cases 23 

reciprocal  requirements  as  to  foreign  corporations 33 

taxes  collected  out  of  interest  of 34 

securities  to  be  examined 51 

agents  not  to  act  until  securities  deposited 54 

by  life,  health  and  casualty  corporation,  in  certain  cases 71 

by  life,  health  and  casualty  corporations,  withdrawal  of 72 

withdrawal  of,  by  foreign  life  insurance  corporation 72 

special  deposit  to  secure  registered  policies  and  annuity  bonds 73 

special  deposit,  transfer  of 73 

special  deposit,  amount  of 73 

receiver  to  take  possession  of 76 

conversion  of,  into  money 77 

transfer  by  superintendent  to  receiver 104 

by  foreign  mutual  fire  insurance  companies 149 

not  necessary  by  co-operative  or  assessment  corporations 202 

by   co-operative  companies 215 

Deputy  Superintendents: 

appointment  of B 

powers  and  duties  of 6 

compensation  of   5 

no  charge  for  personal  examination  by 7 

Designation: 

of  principal  office  of  co-operative  company 203 

of  person  on  whom  process  may  be  served  by  co-operative  company. . .  203 

Directors: 

number  of    10 

reduction  of  number  of 10 

not  to  be  pecuniarily  interested  in  transactions 36 

misdemeanor  of    36 

in  specially  chartered  corporation,  residents  of  State 37 

issuance  of  stock  by 42 

liability  of,  on  account  of  impairment  of  capital 42,    43 

to  make  good  impairment  of  mutual  insurance  company 43 

may  reduce  capital  stock  on  account  of  impairment 86 

nomination  of  candidates  for 04 

election  of   04 

approval  :?f j  '-c  conversion  of  stock  life  to  mutual 05 

of  fire  insurance  corporations,  salaries  of  officers 08 

to  authorize  investments  of  life  insurance  corporations 100 

statement  of  monies  used  in  election  of 103 

to  be  divided  into  classes 106 

of  mutual  fire  insurance  corporation,  powers  of 113 

of  mutual  fire  companies,  to  make  assessments 116 


General  Index. 

(References  are  to  sections.) 

Oirectors  —  (Continued) : 

of  fire  corporations,  liability  of 119 

of  stock  fire  company,  powers  of,  after  change  from  mutual  company,  125 

of  fire  corporation,  assent  to  consolidation  or  merger 129 

of  title  and  credit  guaranty  corporations i 175 

number  of 176 

quorum   of    176 

change  of  number  of 175 

of  mutual  employers'  liability  corporations 187 

of  workmen's  compensation  corporations 187 

of  co-operative  and  assessment  corporations,  election  of 200 

number  of  companies  to  insure  domestic  animals 250 

election  of,  company  to  insure  domestic  animals 251 

of  co-operative  fire  insurance  cor»orations 264 

of  mutual  automobile  fire  insurance  corporations 322 

of  mutual  automobile  casualty  ins'tirance  corporations 342 

Disbursements: 

vouchers  required 99 

Discrimination: 

between  foreign  corporations  of  same  State 33 

and  rebating  prohibited 65 

prohibited 89 

what  is  not 89 

against  colored  persons,  prohibited 90 

under  accident  or  health  pol idles  prohibited 108 

District  Attorney: 

to  assist  fire  marshal 373 

Dividends: 

payments  of,  by  life  insurance  corporations 8S 

when  to  be  declared  by  fire  corporations 117 

improper  dividends  by  fire  corporations 117 

scrip  dividends  of  fire  corporations 117 

not  to  be  declared  by  fire  corporation  having  guaranty  or  special 

reserve   fund    130 

of   mutual   employer's   liability   corporations 190 

of    workmen's    compensation    corporations 190 

mutual  automobile  fire  insurance  corporations 325 

mutual  automobile  casualty   insurance  corporations 345 

Documents  (see  Books): 

to  be  in  custody  of  superintendent 2 

in  department,  access  of  State  Treasurer  to 74 

not  to  be  considered  assets 132 

Domestic  Animals  (see  Domestic  Animals,  Corporations  for  Insurance  of). 

Domestic  Corporations  (see  Insurance  Corporations): 

consent  of  directors  of,  to  investment  of  surplus 16 

doing  business  in  other  States,  investment  of  securities  in  such  States,    16 
issuance  of  reciprocal  certificate 204-a 


Gi:ni;rai.    Iniu^x. 

(References  are  to  sections.) 

Domestic  Animals,  Corporations  for  Insurance  of: 

fees  for  filing  charter Q 

fees  for  filing  report  of tf 

expenses  for  examinations  of 7 

incorporation 250 

annual  meeting,  election  of  directors  and  officers 261 

annual  report,  contents 252 

annual  report,  failure  to  make 252 

examinations  by  superintendent 253 

order  restraining,  from  doing  business 253 

receiver   for    253 

assessments,  how  made 254 

by-laws  regulate  assessments 254 

Earthquakes: 

insurance  against  loss  by 110 

insurance,  by  co-operative  fire  insurance  corporations 262 

Election  (see  Annual  Election): 

of  directors  of  life  insurance  corporation 94 

of  directors,  methods  of  voting  by  policyholders 94 

of  directors,  how  held 94 

of  directors,  inspectors  of 94 

subject  to  supervision  of  superintendent 94 

eligibility  of  voters  of  mutual  marine  corporations 155 

Emergency  Fund: 

of  co-operative  or  assessment  insurance  corporation 205 

use  of  excess  of 205 

of  foreign  corporation 205 

Employer's  Liability: 

insurance  for  employee 70 

unearned  premium  and  claim  reserves 70 

Employes: 

employer  can  take  out  insurance  on 55 

insurance  against  injuries  by 70 

not  to  omit  name  of  policyholder  from  list 94 

of  life  insurance  corporation,  term  of  employment  of 98 

Endowment  Policy: 

reserve  upon    88 

standard  provisions  concerning 101 

Estimate: 

of  surplus  profits  of  fire  corporations 117 

of  liabilities  of  fire  corporations 118 

Evidence: 

report  of  examiners  is  presumptive 39 

affidavit  of  agent  «a  to  notice  of  premium  presumptive 92 


General  Index. 

(Refereuces  axe  to  sections.) 
Examination: 

expenses   of    , 7 

no  charge  for,  if  made  by  superintendent  or  deputy 7 

expenses  for,  liow  paid 7 

expenses  for,  repayment  of,  by  corporation 7 

of  proposed  corporation  by  superintendent 11 

of  foreign  coi*poration 25 

of  foreign  country  corporation 27 

of  trustees  of  foreign  country  corporation 27 

when  and  by  whom  made 39 

whom  to  be  examined 39 

upon  request  of  stockholder 40 

of  capital  of  mutual  insurance  company 43 

of  securities  deposited 61 

certificate  of    51 

of  fire  corporations  in  case  of  extensive  conflagration 132 

into  affairs  of  credit  guaranty  corporations 178 

of  title  guaranty  company 184 

of  co-operative  or  assessment  companies 209 

into  affairs  of  fraternal  benefit  society 243 

of  corporations  to  insure  domestic  animals 253 

Examiner: 

presentment  of  bill  of 7 

no  fees  for  legislative  service 7 

appointed  by  superintendent 11 

to  examine  affaiis  of  proposed  corporation. 11 

certificate  of 11 

appointed    by    superintendent 39 

who  are  qualified  to  be 39 

report  to  be  made  by  order  of 39 

report  of,  presumptive  evidence 39 

Exchange  of  Securities: 

deposited   with   superintendent 14 

when  valid  16 

record   of    16 

Exemption: 

of  payn^pnt  to  beneficiary 212 

from  execution  of  benefits  from  fraternal  societies 240 

of  certain  societies , 245 

certain  police  associations 245 

of  fraternal  societies  from  taxation 246 

Expenses: 

of  examination  of  corporation 7 

of  department,  how  defrayed 8 

of  registration  of  policies  and  annuity  bonds 75 

limitation  of   97 

Explosion: 

insurauce   against    70 


General  Index. 

(References  are  to  sections.) 
Explosive: 

definition  of 35S 

regulations  regarding 359 

where  kept 360 

magazines  for 361 

caps  not  kept  in  magazines 362 

penalties  regarding 363 

exceptions 366 

Extension: 

of  charter  of  mutual  fire  company 126 

of  charter  of  marine  corporation 158 

Federal  Courts: 

removal  of  causes  to 30 

Fees: 

for    filing   charter o 

for  filing  annual  report 6 

for  filing  certificate  of  authority,  deposit,  valuation  or  compliance 6 

for  filing  of  any  paper 6 

for  affixing  seal  of  superintendent 6 

payment  of,  into  State  treasury 6 

for  examination  of  title  to  real  property 28 

remittance  of,  to  foreign  corporations 33 

for  forwarding  process  by  superintendent 35 

not  to  be  included,  fire  insurance 144 

to  be  indorsed  on  policy,  fire  insurance 146 

Fictitious  Name: 

use    of,    forbidden 54 

Fidelity: 

insurance  on   70 

Fire: 

umpire  to  ascertain  aamage  by 121-a 

to  be  reported  by  fire  insurance  companies 354 

Fire  Departments: 

payment  of  taxes  to,  by  foreign  corporations 133 

may  collect  penalty  for  neglect  of  foreign  fire  corporation  to  pay  tax,  135 

may  collect  penalty  for  refusal  to  exhibit  foreign  fire  policies 136 

Fire  Insurance  Corporations  (See  Insurance  Corporations.  See  Mutual 
Fire  Insurance  Corporations.  See  Co-operative  Fire  Insurance 
Corjwrations) : 

minimum  amount  of  capital  stock  of 12 

lien  on  stock  and  profits 19 

readmission  of  certain  foreign  corporations 56 

proceedings  against,  liquidation  of  delinquent 63 

incorporation  of    HO 


Gen-erai.  Index. 

(References  are  to  sections.) 

Fire  Insurance  Corporations  (see  Insurance  Corporations.  See  Mutual 
Fire  Insurance  Corporations.  See  Co-operative  Fire  Insurance 
Corporations)  —  Continued: 

must  publish  notice  of  intention  to  incorporate 110 

shall  not  deal  in  merchandise,  etc 110 

subscriptions  to  capital  of 112 

capital  stock  notes  of 113 

deposit   notes   of 113,  115 

cash  capital  of  mutual  companies 114 

deposit  notes  and  cash  payments  by  members  of  mutual  companies. . .   115 

assessments  in  mutual  companies 116 

estimation  of  surplus  profits  of 117 

increase  of  capital   stock  of 117 

examination    of    118 

allowance  of  assets  and  estimation  of  liabilities  upon  examination  of,  118 

liability  of  directors  and  corporators 119 

what  must  appear  on  face  of  policy  of 120 

standard  form  of  policy  of 121 

payment  on  cancellation  of  policy  of 122 

cancellation  of  policies  of,  by  receiver 123 

extension  of  joint-stock  corporations 124 

change  of  mutual  to  stock  corporations 125 

extension  of  term  of  charter  of  mutual  fire  corporations 126 

reincorporation  of  existing  corporations 127 

duration  of  charter  of 128 

merger  of   129 

consolidation  of 129 

guaranty  and  special  reserve  funds 130 

investment  of  guaranty  and  special  reserve  funds 131 

proceedings  in  case  of  extensive  conflagrations 132 

amount  of  guaranty  and  special  reserve  fund  to  be  set  out  in  annual 

statement  to  superintendent 132 

certain  documents  of,  not  to  be  considered  as  assets 132 

payment  of  tax  to  fire  departments  by  foreign  fire  corporations 133 

payment  of  tax  to  superintendent  by  foreign  fire  corporations 138 

agent  of  foreign  corporation  not  to  act  until  payment  of  taxes 139 

undertaking  of  agent  for  foreign 134 

penalty  for  neglect  of  agent  to  pay  tax 135 

penalty  for  failure  to  exhibit  foreign  fire  policy 136 

license  to  agents  of  foreign  corporations  in  excepted  cases 137 

fees  not  included  in  consideration 144 

report  of  consideration  to  company 145 

fees  and  charges  indorsed  on  policy 146 

penalty,  violation  provisions 144,  147 

penalties,  oflSccrs  and  agents l'*8 

Fire  Marshal  (see  State  Fire  Marshal). 

Foreign  Casualty  Insurance  Corporation: 

of  foreign  country,  capital  of *^ 


General   Index. 

(References  are  to  sections.) 

Foreign  Co-operative  or  Assessment  Corporations: 

must  secure  certificate  of  authority 204 

of  State,  imposing  restrictions  on  domestic  corporations 204 

reserve   fund  of 205 

authority  of,  may  be  revoked 205 

Foreign  Corporation: 

jurisdiction  of  superintendent  of 25 

examination  of   25 

revocation  of  certificate  of 25 

transactions  allowed   25 

liabilities   of 25 

deposit  of  securities  by 20 

of  foreign  country,  capital  of 27 

of  foreign  country,  deposit  of  securities 27 

of  foreign  country,  voluntary  deposit  of  securities 27 

certificate  of  authority;  renewal,  revocation 32 

of  other  States,  capital  required 5(5 

authorization  of,  mutual  automobile  fire 328 

authorization  of,  mutual  automobile  casualty 348 

Foreign  Country: 

capital  of  corporation  of 27 

Foreign  Fraternal  Beneficiary  Corporation: 

transacting  business  in  New  York  may  continue 237 

certificate  to  be  filed  with  superintendent 237 

Foreign  Insurance  Corporation: 

of  foreign  country,  capital  of 27 

of  foreign  country,  report  of 27 

to  file  copy  of  charter 29 

business  same  as  similar  domestic  insurance  corporation 29 

appointment  as  attorney  of .  30 

removal  of  cause  to  federal  courts  by 30 

certified  copy  of  certificate  to  be  filed 31 

renewal  of  certificate  of  authority 32 

reciprocal  requirements   33 

taxation   of    34 

revocation  of  authority  of,  for  failure  to  pay  taxes 34 

taxation  of  health  or  casualty  company 34 

report  of   45 

certificate  of  authority  of  agents  of 60 

certain  provisions  of  policies,  prohibited 60 

Foreign  Fire  Insurance  Corporation: 

taxation  on  premiums  of 133,  HS 

agent  of,  not  to  act  until  taxes  paid 1 .1*5 

undertaking  of  agent  of K<4 

transaction  of  business  without  agent 134 

neglect  of  agent  of,  to  pay  tax 135 

penalty  for  refusal  to  exhibit  policy  of 136 

license  to  agents  of,  in  excepted  cases 137 


General  Index. 

(References  are  to  sections.) 

Foreign  Life  Insurance  Corporations: 

power  to  hold  and  dispose  of  real  property 20 

of  foreign  country,  capital  of 27 

taxation  of    34 

discontinuance  of  business  of 72 

withdrawal  of  deposit  by 72 

distribution  of  surplus  to  policyholders 83 

certificate  of  authority  not  required  by  certain  agents  of 91 

limitation  of  new  business 96 

limitation  of  expenses  of 97 

annual  report   of 103 

requirements  of  incorporation 149 

annual  tax   149a 

annual  report  required 149a 

•gents 149b 

distribution  of  annual  tax 149c 

collector  of  annual  tax 149c 

Foreign  Mutual  Fire  Insurance  Company; 

requirements  of  incorporation 149 

annual  tax  149a 

annual  report    149a 

agents 149h 

distribution  of  annual  tax 149c 

collector  of  annual  tax 149c 

Foreign  Mutual  Insurance  Corporations: 

authorization 194 

Forfeited  (see  Forfeiture). 
Forfeiture: 

surrender  of  value  of  lapsed  or  forfeited  policies 88 

no  forfeiture  of  policy  without  notice 92 

Forms: 

of  annual  reports  to  be  furnished  by  superintendent 45 

Franchise  Tax: 

on  insurance  corporations Appendix 

Fraternal  Beneficiary  Corporations: 

fees  for  filing  charter  of 8 

fees  for  filing  report  of 0 

certificate  of  authorization  not  required  by 9 

Article  I  not  applicable  to 57 

admission  of  minors  to 241 

Fraternal  Beneficiary  Societies: 

definition  of  230 

benefits,  beneficiaries  a^^  ^^.c^mbership 231 

shall  provide  for  death  benefits 231 

may  provide  sick  or  accident  benefits 231 

death  benefits,  to  whom  payable 231 


General  Index. 

(References  are  to  sections.) 

Fraternal  Beneficiary  Societies —  (Continued) 

certificate,  what  to  contain 232 

funds 233 

incorporation 234 

reincorporation 235 

mergers  must  be  by  contract,  etc 236 

foreign  societies  may  continue 237 

place  of  meeting 238 

liability  of  officers 238 

power  of  subordinate  body  to  waive  laws 239 

exemption  from  execution 240 

amendment  to  constitution  and  by-laws 241 

reports  and  valuations 242 

examination  by  superintendent 243 

revocation  of  license 244 

exemption  of  certain  societies 245 

taxation,  exemption  from 246 

penalties  for  false  statements 247 

appUoation  of  other  sections 248 

review  of  findings  of  superintendent 249 

Freights: 

insurance  upon   110 

Funds: 

of  title  guaranty  company,  investment  of 176 

of  fraternal  beneht  society 233 

General  Corporation  Law  (see  Appendix). 

Glass  (see  Life,  Health  and  Casualty  Insurance  Corporations): 

incorporation  of  company  for  insurance  against  breakage  of 70 

Guaranty  Corporations   (see  Life,  Health  and  Casualty  Insurance  Cor- 
porations) : 
incorporation  of   70 

Guaranty  Fund: 

of  title  guaranty  corporation 176 

application  of   176 

additions  to   176 

Guaranty  Surplus  Fund: 

of  fire  corporations 130 

examination  of  corporation  before  allowance  of 130 

no  dividends  by  corporations  having 130 

deductions  from  profits,  etc 130 

net  surplus  turned  into 130 

how  invested  131 

amount  of,  to  be  set  forth  in  annual  statement  to  superintendent 132 

discontinuance  of 132-a 

Health: 

standard  provisions    107 


General  Index. 

(References  are  to  sections.) 

Health  Insurance  Corporations  (see  Life,  Health  and  Casualty  Insurance 
Corporations) : 

agents    for    Ola 

valuation  of  policies  of 93 

increased  powers  of 105 

standard  provisions    107 

discriminations  prohibited 108 

Household  Furniture: 

insurance   on    110 

Husband: 

wife  may  insure  life,  etc.,  of 66 

Impairment  of  Capital: 

to  be  made  good  by  stockholders 41,    42 

of  mutual  insurance  companies 43 

of  life  insurance  corporation 86 

reduction  of  capital  on  account  of 86 

in  case  of  extensive  conflagrations 132 

Incorporation: 

of  life,  health  and  casualty  insurance  corporations 70 

of  mutual  companies    70 

of  fire  insurance  corporations 110 

of  foreign  mutual  fire  insurance  corporation 149 

of  marine  insurance  corporation 160 

of  title  guaranty  corporations 170 

of  credit  guaranty  corporations 170 

of  mutual  employers'  liability  corporations 185 

of   workmen's   compensation   corporations 186 

of  co-operative  or  assessment  corporations 200 

of  a  fraternal  beneficiary  society 234 

when  a  company  to  insiu-e  domestic  animals 250 

of  co-operative  fire  insurance  corporation 263 

mutual  automobile  fire  insurance  corporations 320 

mutual  automobile  casualty  insurance  corporations 340 

Incorporators   (see  Corporators). 

Indemnity: 

to  banks,  etc.,  against  loss 70 

Independent  Nominations: 

when  none  is  made 94 

Independent  Order  of  Odd  Fellows: 

certificate  of  authority  of  agents  of,  not  required 91 

provisions  of  article  VII  does  not  apply 239 

Industrial  Companies: 

valuation  of  policies 84 

certificate  of  authority  of  agents  of,  not  required 91 

Infants: 

insurance  on  life  of,  without  consent  of 66 

insurance  contract  of 66 


GENEit.iL  Index. 

(References  are  to  sections.) 
Injunction: 

to  restrain  insolvent  corporation  from  traiisacliii;^  business 76 

to  restrain  co-operative  company  from  doing  business 207,  208 

to  restrain  corporation  for  insurance  of  domestic  animals 252 

corporation  for  insurance  of  domestic  animals,  for  conducting  basiness 

fraudulently,  etc 263 

Injuries: 

insurance  against   79 

Insolvency: 

when  corporation  deemed  insolvent 21 

insurance  corporation,  when  deemed 41 

when  depositing  corporation  deemed  to  be 76 

Inspection: 

report  of  by  fire  marshal 363 

Inspectors  of  Election: 

how  appointed,  their  duties 94 

Insurance: 

restriction  of,  town  co-operative  corporation 271 

Insurance  Corporations: 

expenses  of  examination  of 7 

assessment  of,  to  pay  expenses  of  department 8 

reduction  of  number  of  directors 10 

examination  of,  by  superintendent 11 

minimum  capital  stock  of , 12 

may  collept  interest  on  securities  deposited 14 

"^  investment  of  capital  and  surplus 16 

restrictions  as  to  ownership  of  real  property  by 20 

when  deemed  insolvent 21 

reinsurance  of  risks 22 

to  file  schedules  of  reinsurance 22 

limitations  of  risks  of 24 

examination  of  affairs  of 39 

impairment  of  capital  of 41 

when  deemed  insolvent  on  account  of  impairment  of  capital 41 

deceptive  statements  by,  prohibited 47 

agents   of    49 

to  cause  securities  to  be  examined 6) 

reorganization    of    corporations 5i. 

amendment  of  certificates  of 52 

penalty  for  violation  of  Insurance  Law 53 

agent  not  to  act  for,  unauthorized 54 

policy  of,  to  contain  entire  contract 58 

certain  provisions  of  policies  prohibited 59 

misrepresentations   of,  prohibited 60 


General  Index. 

(References  are  to  sections.) 

Insurance  Corporations  — (Continued) 

valuation  of  policies  of 84 

proceedings  against,  liquidation  of  delinquent 63 

not  to  omit  name  of  policyholder  from  list 94 

not  to  spend  money  in  canvass  of  election U4 

no  officer  to  issue  circular  containing  false  statement  in  regard  to 

elections 94 

reincorporation  of  certain 217 

franchise  tax    Appendix 

Insurance  Department: 

creation  of   2 

offices  for   3 

expenses  of;   how  defrayed 8 

access  of  State  Treasurer  to  books  of 74 

Insurance  Law: 

application  to  religious  orders 64 

Insurance  Rate: 

organizations  to  assist  making 140 

rate  making  associations  141 

Interest: 

on  seciu-ities  deposited 14 

on  securities  deposited,  taxes  collected  out  of 34 

on  scrip  79 

on  certain  annuities 84 

on  cash  capital  of  mutual  company 114 

Investigation: 

of  insolvent  corporation,  yearly * 79 

Investment: 

of  surplus  by  domestic  insurance  corporation 16 

of  funds  in  foreign  states 16 

of  capital  and  surplus 16 

in  what  securities 16 

on  its  own  stock  not  allowed 16 

on  stock  of  corporation  doing  same  business,  not  allowed 16 

of  securities  of  foreign  country  corporations 27 

evidences  of,  to  be  filed  by  foreign  corporation 32 

of  surplus  by  receiver 78,  79 

cannot  enter  into  joint 100 

of  life  insurance  corporations 100 

of  life  insurance  companies  to  be  authorized  by  board  of  directors 100 

of  cash  capital  of  mutual  company 114 

of  proceeds  from  proceeds  of  deposit  notes  of  mutual  companies....  115 

of  guaranty  and  special  reserve  fund 131 

of  capital  and  funds  of  title  guaranty  company 176 


General  Index. 

(References  are  to  sections.) 

Jewels: 

marine   insurance   upon 150 

Joint-Stock  Corporation: 

may  become  mutual 18,    96 

extension  of  charter  of 124 

Knights  of  Pythias: 

provisions  of  article  VTI  does  not  apply 239 

insurance  against  loss  by 110 

Lake  Navigation: 

insurance  against  loss  by 110 

Lapsed  (see  Policies): 

surrender  value  of  lapsed  or  forfeited  policies 88 

Larceny: 

co-operative  insurance  against  loss  by 251 

Liabilities: 

what  shall  be  allowed  as 86 

of  fire  insurance  corporations,  estimation  of 118 

of  directors  and  corporators  of  fire  insurance  corporations 119 

of  new  fire  corporation  on  merger 129 

of  credit  guaranty  corporations,  estimation  of 178 

Liability  Companies: 

claim  reserves  for 86 

Liability  Insurance: 

by  any  employee,  etc 70 

License: 

revocation  of,  of  person  inducing  surrender  of  insurance 60 

to  agents  in  excepted  cases 137 

in  excepted  cases 138 

revocation  of,  of  fraternal  societies 244 

of  company  to  insure  domestic  animals. 250 

to  Lloyds  and  inter-insurers 302 

Lien: 

upon  stock  and  profits 10 

waiver  of    19 

Lieutenants'  Benevolent  Association: 

exemption  of   245 

Life,  Health  and  Casualty  Insurance  Corporations   (see  Insurance  Cor- 
porations) : 

minimum  capital  stock  of 12 

reincorporation  of   62 

proceedings  against,  liquidation  of  delinquent 6J 

incorporation  of   70 

for  what  purpose  incorporated 70 

mutual  companies    70 

completion  of  organization  of 71 

capital  stock  of,  to  be  fully  paid  in 71 


General  Index.  ' 

(References  are  to  sections.) 

Life,  Health  and   Casualty  Insurance   Corporations   (see  Insurance  Cor- 
porations)— ^( Continued) : 

withdrawal  of  securities  of 72 

special  deposit  to  secure  registered  policies,  etc 73 

annual  report  of  registered  policies  and  annuity  bonds 74 

registration  of  policies  and  annuity  bonds 75 

when  deemed  insolvent 78 

annual  investigation  of  insolvent  corporation 79 

powers  of  receiver  of 81 

valuation  of  policies  of  health  insurance  corporations 93 

Life  Insurance  Corporations: 

power  to  hold  and  dispose  of  real  property 20 

loan  upon  policy  by 36 

amendment  of  charter  of 52 

reincorporation  of    52 

See  Life,  Health  and  Casualty  Insurance  Corporations. 

proceedings  against,  liquidation  of  delinquent 63 

issuance  of  registered  policies  in  exchange 80 

powers  of  receiver  of 81 

when  receiver  not  to  be  appointed 82 

when  not  to  issue  new  policies 82 

distribution  of  surplus  to  policyholders 83 

may   require   policyholders   to   elect   as   to   manner   of   payment   of 

dividends 83 

payment  of  dividends  to  policyholders 83 

valuation  of  policies  of 84 

may  make  voluntary  valuation  of  policies 84 

when  actual  premium  is  less  than  net 85 

what  shall  be  allowed  as  assets  of 86 

impairment  of  capital  stock  of 86 

reduction  of  capital  on  account  of  impairment 86 

may  accumulate  contingency  reserve 87 

surrender  value  of  lapsed  or  forfeited  policies 88 

discriminations  by,  prohibited 89 

discriminations  against  colored  persons  forbidden 90 

no  forfeiture  of  policy  of,  without  notice 92 

names  of  policyholders  to  be  filed  with  superintendent 94 

election  of  directors  of 94 

conversion  of  stock  corporation  to  mutual 95 

limitation  of  new  business  of 98 

limitation  of  expenses 97 

salaries  of  officers  and  agents 98 

vouchers  required  for  disbursements  of 99 

investments  of,  to  be  approved  by  directors 100 

cannot  enter  into  joint  investments 100 


Cenekaj.  Index. 


( References  are  to  sections.) 


A 


Life  Insurance  Corporations  —  (Continued)  : 

investments  of   100 

standard  provision  concerning  policies 101 

participating  policies 102 

annual   reports  of 103 

directors  to  be  divided,  domestic  mutual 100 

reincorporation  of  certain 217 

policies  to  indicate  assessment  plan 211) 

policies  must  be  filed  and  approved 220 

Lightning: 

insurance,  by  co-operative  fire  insurance  corporations 262 

Limitation: 

of  risks  24 

of  new  business  of  life  insurance  corporations 96 

of  expenses  of  life  insurance  corporation 97 

of  business,  town  co-operative  corporation 278 

of  business,  town  insurance  corporation 340 

Limitation  of  Actions: 

on  forfeited  policy 92 

Limit  of  Risks: 

amount  of    24 

Lloyds: 

Insurance  Law  applies 1 

article  I  not  applicable  to 57 

articles  of  association  to  be  filed 57 

amendment  of  articles  of  association 67 

restrictions  on  policies  of 121 

provisions  applicable  162 

application  of  article   10 300 

examination  and  certificate 301 

general  provisions  affecting 302-304 

application  of  other  sections 303 

of  other  States,  admission  of 305 

Losses: 

statement  of,  to  be  filed 32 

Machinery: 

insurance  against  damage  by 70 

Marine  Insurance  Corporations: 

minimum  amount  of  capital  stock  of 12 

lien  on  stock  and  profits 19 


General  Index. 

(References  are  to  sections.) 

Marine  Insurance  Corporations — (Continued): 

power  to  hold  real  property 20 

readmission  of  certain  foreign  corporations 56 

proceedings   against,  liquidation  of  delinquent t)3 

incorporation  of   150 

notice  of  intention  to  incorporate  to  be  filed 150 

charter  of  150 

duration   of    150 

certain  transactions  of,  prohibited 150 

subscription  to  capital  stock  of 151 

restrictions  as  to  capital  stock  and  premium  notes 152 

increase  of  capital  by  mutual  marine  corporations 153 

cash  capital  of  mutual 154 

division  of  profits  of  mutual 154 

rights  of  holders  to  cash  capital  of  mutual 155 

certificates  convertible  into  stock 156 

amendment  of  charter  of 157 

extension  of  charter  of 158 

mutual  may  change  to  stock 159 

insurance  on   canals 160 

agent  must  not  charge  excessive  rates  for  insiu*ance  upon  canals 160 

may  maintain  agencies  outside  of  United  States 161 

Marshal  (see  State  Fire  Marshal) : 

appointment  of 350 

Masons: 

exemption  of,  from  provisions  of  article  VI 214 

Meetings  (see  Annual  Meetings): 

election  of  directors  of  life,  health,  casualty  corporations 94 

changing  number  of  directors  of  title  and  credit  guaranty  corporations.  175 

of  employers'  liability  corporations 188 

of  workmen's   compensation  corporations 188 

of  mutual  automobile  fire  insurance  corporations 323 

of  mutual  automobile  casualty  insurance  corporations 343 

Members: 

of  mutual  fire  insurance  corporations 114 

of  mutual  fire  companies,  assessments  on 110 

of  mutual  fire  companies,  liability  of 116 

of  co-operative  companies,  number  required 200 

accumulation  of  fund  for  benefit  of 205 

of  co-operative  companies,  quorum  of 216 

of  co-operative  fire  insurance  corporations 264 

town  insurance  corporation,  may  withdraw 341 

town  insurance  corporation,  non-residents  as 342 

Membership: 

of  company  to  insure  domestic  animals 250 


General  Index. 

(References  are  to  sections.) 

Merger  (see  Consolidation): 

of  fire  corporations,  approval  of  superintendent 129 

to  be  filed  in  county  clerk's  oflSce 129 

of  fire  corporations 129 

of  title  guaranty  corporations 179 

with  banking  corporations 179 

of  fraternal  benefit  society 236 

Minors: 

admission  of 218 

Misdemeanor: 

of  directors  or  oflBcers  pecuniarily  interested  in  transactions 36 

violation  of  Insurance  Law  is 53 

misrepresentations    by    corporation 60 

committed  at  election  of  directors 94 

for  agent  to  act  for  foreign  corporation  before  payment  of  tax 139 

Misrepresentations : 

by  corporation  prohibited 60 

Mortgages: 

deposit  of    13 

property  covered  by,  must  be  insured 13 

minimum  amount  of 13 

aflBdavit  annexed  to  deposit  of 13 

deposit  of,  in  certain  cases 28 

investments  of  life  insurance  corporations  in 100 

Municipal  Corporations: 

insurance  of  bonds  of 70 

investments  of  life  insurance  corporations  in 100 

Mutual  Benefit  Fraternity: 

certain  societies   declared  to  be 233 

Mutual  Automobile  Casualty  Insurance  Corporations: 

incorporation 340 

completion  of   organization 341 

directors    and    officers 342 

meetings;    basis  of  right  to  vote 343 

reserves;   suspension,  etc.,,  of  certificates;   expenses 344 

dividends 345 

assessments 346 

reports  to,  etc.,  superintendent ;  policy  forms 347 

authorization  of  foreign  corporations 348 

Mutual  Automobile  fire  Insurance  Corporations: 

incorporation 320 

completion  of  organization 320 

directors  and  officers 322 

meetings;  basis  of  right  to  vote 323 

reserves;    suspension,  etc..  of   certificate:    oxpensos 324 

dividends 325 

assessments 326 

reports,  etc.,   to   superintendent;    policy  forms 327 

authorization  of  foreign  companies 328 


General  Index. 

(References  are  to  sections.) 

Mutual  Employers'  Liability;  and  Workmen's  Compensation  Corporations: 

incorporation  186 

completion  of  organization 180 

directors    and    officers 187 

meetings ;  basis  of  right  to  vote 188 

assessments  189 

dividends 190 

reserves;   supervision;  cancellation  and  reinstatement  of  certificate..  191 

reports  to  and  examinations  by  superintendent  of  insurance 192 

prevention   of   accidents 193 

authorization  of  foreign  mutual  insurance  corporations 194 

Mutual  Fire  Insurance  Corporations: 

proceedings  against,  liquidation  of  delinquent 63 

not  to  insure  foreign  property Ill 

See  Fire  Insurance  Corporations. 

when  permitted  to  begin  business Ill 

capital  stock  of Ill 

premium   notes  of Ill 

See  Fire  Insurance  Corporations. 

capital  stock  notes  and  deposit  notes  of 113,  115 

members  of   114 

may  unite  cash  capital  as  an  additional  security 114 

investment  of  cash  capital  of 114 

interest  on  cash  capital  of 114 

liability  of  cash  capital  of 114 

cash  capital  of,  when  to  be  paid  in 114 

cash  capital  of,  when  to  be  paid  off 114 

deposit  notes  of 115 

cash  payments  in 115,  116 

assessments  in    116 

examination  of  118 

policy  of   120 

change  of,  to  stock  corporations 125 

extension  of  term  of  charter  of 126 

Mutual  Insurance  Corporations: 

impairment  of  capital  of 43 

directors  of,  to  make  good  impairment 43 

proceedings  against,  liquidation  of  delinquent 63 

incorporation  of   70 

capital   stock  of 71 

may  borrow  money 71 

Mutual  Life  Insurance  Corporations: 

conversion  of  stock  life  corporation  to. 95 

directors  to  be  divided 106 


0^^lS'ERAL  Index. 

(References  are  to  sections.) 

Mutual  Marine  Insurance  Corporations  (see  Marine  Insurance  Corporations) : 

proceedings  against,  liquidation  of  delinquent 63 

premium   notes    of 152 

increase  of  capital  of 15.3 

cash  capital   of 154 

division  of  profits  of 154 

rights  and  liabilities  of  holders  of  cash  capital  of 155 

change  of  certificates  of  profits  into  stock 156 

Names: 

of  policyholders   to  be   filed  with   superintendent   before   election   of 

directors 14 

agent  not  to  transact  business  under  fictitious 64 

Net  Surplus  (see  Surplus): 

turned  into  guaranty  and  special  reserve  fund 130 

• 

New  Business: 

limitation  of    98 

limitation  of,  foreign  life  company 96 

New  York  City  Police  Endowment  Association: 

exemption  of   245 

Nominations: 

of  candidates  for  directors 94 

Non-Residents: 

insurance  of,  town  co-operative  corporation 274 

as  members,  town  insurance  corporation 342 

Notes  (see  Premium  Notes). 

Notice: 

of  filing  certificate  of  foreign  corporation 31 

of  intention  to  form  life,  health  or  casualty  insurance  corporation...  71 

of  withdrawal  of  securities  deposited 72 

of  payment  of   premium 92 

contents  of  notice  of  premium 92 

no  forfeiture  of  policy  without 92 

of  intention  to  incorporate  a  fire  insurance  company 1 10 

of  assessments  in  mutual  fire  companies 116 

of  intention  to  incorporate  a  marine  insurance  company 150 

Notice  of  Assessments: 

of  co-operative  or  assessment  insurance  corporations 210 

contents    of    210 

afladavit  of  clerk  is  presumptive  evidence  of 210 

Odd  Fellows: 

exemption  of,  from  provisions  of  article  VI 214 


General  Index. 

(References  are  to  sections.) 
Officers: 

not  to  be  pecuniarily  interested,  in  transactions 36 

misdemeanor  of    36 

shall  aid  in  the  examination  of  corporation 39 

to  examine  securities  deposited 51 

to  issue  certificate  of  examination  of  securities 51 

not  to  omit  name  of  policyholder  from  list 94 

not  to  advance  money  ror  elections 94 

not  to  solicit  votes  during  working  hours 94 

agent,  employee,  not  to  coerce  other  agent,  officer  or  employee 94 

of  fire  insuranciB  corporations,  officers  of 98 

of  mutual  employers^  liability  corporations 187 

of  workmen's  compensation  corporations 187 

of  company  to  insure  domestic  animals 251 

of  co-operative  fire  insurance  corporation 264 

Offices: 

for  insurance  department 3 

maintenance  of   3 

Official  Ballot: 

to  be  provided  by  superintendent 94 

how  identified  and  numbered 94 

how   arranged    04 

none  others  to  be  used 94 

how  enclosed  in  envelope 94 

how  witnessed    94 

how   returned    94 

only  ballot  to  be  voted 94 

Ordinary  Life  Policy: 

standard  form  for 101 

Organization: 

promotion  of  insurance  companies 66 

Participating  Policies: 

when  life  insurance  corporation  may  issue 102 

Partnership: 

insurance  by    54 

license  to 138 

Penalties: 

for  failure  to  file  annual  report 45 

for  failure  to  reply  to  inquiries  to  superintendent 45 

for  improper  advertisement 48 

for  improper  act  of  agent 50 

for  violation  of  any  provision  of  Insurance  Law 53 

for  neglect  of  agent  of  foreign  corporation  to  pay  tax 135 

for  refusal  to  exhibit  foreign  fire  policies 136 

for  charging  excessive  rates  of  insurance  upon  canals 16(1 

co-operative  or  assessment  insurance  corporations 213 


General  Index. 

(References  are  to  sections.) 
Penalties —  (Continued)  : 

unpaid  assessment,  town  co-operative  corporation 270 

for  violating  provisions  of 144 

fire  insurance  company I47 

for  violation  of  provision 144-147 

by  officers  and  agents 148 

for  fraudulent  or  false  statements 247 

for   failure   to   pay  tax • Appendix 

Pensions: 

not  to  be  granted  to  officers  of  fire  insurance  corporations 98 

Personal  Property: 

not  alienable  in  certain  cases , Appendix 

Policies: 

pledge  of  as  collateral  security 16 

when  not  to  be  issued  without  consent  of  insured 55 

to  contain  entire  contract 58 

contents    of    58 

certain  provisions  in,  prohibited 59 

misrepresentations  of,  prohibited 60 

surrender  of,  to  receiver 62 

what  may  be  embraced  in 70 

registration   of    75 

purchase  of,  by  receiver 81 

when  new  policies  to  be  issued 82 

valuation  of 84 

valuation  of  industrial 84 

reserve  upon  endowment  policy 88 

surrender  value  of  lapsed  or  forfeited 88 

discrimination  against  colored  persons  prohibited 90 

no  forfeiture  without  notice 92 

of  health  insurance,  valuation  of 93 

of  life  and  endowment  insurance,  standard 'provisions 101 

participating 102 

of  fire  insurance  corporations 120 

standard   fire   insurance 121 

payment  on  cancellation  of 122 

cancellation  of,  by  receiver 123 

of  foreign  corporation,  penalty  for  refusal  to  exhibit 136 

of  fire  insuritnce,  report  of  consideration 145 

of  fire  insurance,  fees  and  charges  to  be  indorsed  on 146 

of  mutual  marine  corporations 152 

of  co-operative  company,  payment  of  maximum  amount  of 210 

to  indicate  assessment  plan 219 

life  must  be  filed  and  approved 220 

issued  by  co-operative  fire  insurance  corporations 265 

mutual  automobile  fire   insurance  corporatiouB 327 

mutual  automobile  casualty  insurance  corporations 347 


General  Index. 

(References  are  to  sectiona.) 
Policyholders: 

deposit  of  securities  for  benefit  of 26,  2  < 

may  request  examination  of  corporation 40 

distribution  of  surplus  by  receiver 79 

distribution  of  surplus  to 83 

election  of  manner  of  payment  of  dividends 83 

accumulations  for  benefit  of 86 

lists  of,  to  be  maintained  at  offices  of  corporation 94 

lists  of,  subject  to  inspection 94 

methods  of  voting  by,  for  directors 94 

entitled  to  vote  for  directors 94 

names    and    addresses    of,    to    be    filed    with    superintendent    before 

election 94 

committee  of,  to  receive  names  for  elections 94 

approval  of,  to  conversion  of  stock  life  to  mutual 95 

Powers: 

certain  existing  corporations  increased 105 

Premium: 

on   reinsurance    22 

statement  of  amount  of,  to  be  filed  by  foreign  corporation 32 

of  foreign  corporation,  taxation  on 34 

when  actual  premium  is  less  than  net  premium 85 

annuities,  non-payment  of 88 

surrender  value   of  policies   forfeited  for  non-payment  of 88 

notice  of  payment  of,  to  be  given 92 

of  foreign  fire  corporations,  taxation  on 133 

provisions  concerning,  life  and  endowment  insurance 101 

fire  insurance,  report  of  consideration  as  premium 145 

assessment  tax 149-a 

Premium  Fund: 

how   computed    22 

Premium  Notes: 

receivers  to  make  assessment  on 61 

of  mutual  fire  insurance  corporation Ill 

to  be  approved  by  superintendent Ill 

of  mutual  marine  corporations 152 

Premium  Rates: 

approval  of 67 

Principal  Office: 

of  co-operative  or  assessment  corporation,  designation  of 203 

Procedure: 

in  case  of  impairment  of  reserve  fund 86 

Process : 

service  of,  on  superintendent  as  attorney  of  foreign  corporation 30 

superintendent  to  forward  to  corporation 35 

service  on  co-operative  company,  designation  of  person 203 


General  Index. 

(References  are  to  sections.) 
Profits: 

lien  on,  by  certain  insurance  companies 19 

surplus  of  fire  insurance  corporations 117 

of  mutual  marine  corporation,  division  of 154 

Proxy: 

right  to  vote  by,  on  election  of  directors ^ 94 

revocation  of   94 

nomination  of  person  to  receiver 94 

execution    of    94 

when  invalid    94 

to  be  attached  to  official  ballot 94 

to  sign  official  ballot 94 

Prudential  Companies: 

certificate  of  authority  of  agents  of,  not  required 91 

Public  Adjuster: 

certificate  of  authority 138-a 

Quorum: 

of  members  of  co-operative  company 216 

of  annual  meeting  of  company  to  insure  domestic  animals 251 

Rate  Making  Associations: 

organizations  to  assist  in 140 

supervision  and  inspection  of 141 

Rates: 

town  insurance  corporations  may  fix 337 

organizations  for  assisting  in  establishing 140 

Real  Property: 

deposits  of  mortgages  on,  as  security 13 

affidavit  as  to  value  of 13 

insurance   on    13 

title  and  value  of,  covered  by  securities  deposited 13 

investment  of  capital  and  surplus  in 16 

restrictions  as  to  ownership  of 20 

duration  of  ownership  of 20 

investment  of  life  insurance  corporations  in  mortgages  on 100 

Rebates: 

prohibited ] 89,  90 

Receiver : 

may  insure  23 

order  of  court  for  reinsurance 23 

to  make  assessment  on  premium  notes 61 

surrender  of  policies  to 62 

appointment    of    76 

bond  of    76 

to  take  possession  of  deposit  and  assets 76 

proceedings   by    77 

to  appoint  actuary 77 

when  he  may  be  discharged 77 


General  Index. 

(References  are  to  sections.) 
Receiver— (Continued) : 

to  receive  proceeds  of  securities  sold 77 

to  pay  registered  policies  and  annuity  bonds 77 

additional   duties   of 78 

investment  by,  of  surplus  of  assets 79 

distribution  of  surplus 79 

issuance   of   scrip 79 

powers  of    81 

may  employ  clerks 81 

compensation  of,  how  paid 81 

when  not  to  be  appointed 82 

distribution  of  surplus  to  policyholders 83 

of  fire  insurance  corporations,  cancellation  of  policies 123 

issuance  of  certificate  of  indebtedness  by 123 

report  of  liabilities  by 123 

transfer  of  deposits  by  superintendent  to 104 

Reciprocal: 

requirements  as  to  deposit 33 

Reciprocal   Certificate: 

issuance  by  superintendent 204-a 

Records: 

of  co-operative  fire  insurance  corporations 264 

of  sales  of  explosives 365 

kept  by  State  Fire  Marshal 370 

Reduction: 

of  number  of  directors 10 

Registered  Policies   (see  Policies): 

special  deposit  to  secure 73 

annual  report  of 74 

liability  of  State  to  pay 74 

registration   of    75 

payment   of    77 

issued  in  exchange 80 

Registration: 

of  policies  and  annuity  bonds 75 

Regulation: 

to  be  made  by  State  Fire  Marshal 379 

Reincorporation: 

of  existing  corporations 52 

effect  of    BH 

of  mutual  fire  company  as  a  stock  corporation 125 

of  existing  fire  insurance  companies 127 

of  co-operative  or  assessment  insurance  corporations     206 

of  existing  fraternal  beneficiary  society 235 

Reinsurance: 

method  of  22 

Bchedule  of,  to  be  filed 22 

by  receiver  23 


General  Index. 

(llefereuces  are  to  sections.) 
Reinsurance —  (ContimuHl) : 

only  by  order  of  court 23 

limitation   of   risk 24 

by  co-operative  or  assessment  companies 209 

Reinsurance  Fund: 

of   liability   companies 86 

Religious  Orders: 

provisions  of  insurance  law,  application  to 64 

Removal : 

of  cause  to  United  States  courts  revokes  certificate 30 

Renewal: 

of  certificate  of  authority 32 

of  statements  and  evidences  of  investment 32 

Reorganization: 

of  existing  corporations 52 

effect  of  52 

Report  (see  Annual  Report): 

of  foreign  country  corporation 27 

of  examiners    39 

may  be  withheld  by  superintendent 39 

of  liabilities,  by  receiver 123 

of  consideration  to  fire  insurance  company 145 

of  fraternal  society 242 

of  corporations Appendix 

of  corporations   further   requirements Appendix 

mutual  automobile  fire  insurance  corporations 327 

mutual    automobile   casualty   insurance    corporations 347 

Representative: 

of  policyholders,  not  to  be  paid  by  company 94 

Reserve  Fund  (see  Special  Reserve  Fund): 

computation    of 86 

impairment  of,  procedure 86 

include  dividend  additions,  etc 88 

of  foreign  mutual  fire  insiurance  corporations 149 

mutual  employers'  liability  corporations 191 

workmen's    compensation    corporations 191 

of  co-operative  or  assessment  insurance  corporation 205 

use  of  excess  of 205 

of   foreign   corporation 205 

mutual  automobile  fire  insurance  corporations 324 

mutual    automobile    casualty    insurance    corporations 344 

Revenues: 

of  fraternal  beneficiary  society 236 

Revocation: 

of  certificate  of  authority  of  foreign  corporation 32 


General  Index. 

(Refprences  are  to  sectiona.) 
Risks: 

reinsurance  of  22 

limitation  of   24 

taken  after  impairment  of  capital 42,  43 

transfer  of,  by  co-operative  or  assessment  companies 209 

classification  of,  town  insurance  corporation 337 

Salary: 

of  superintendent  2 

of  clerks    6 

of  deputy  superintendents 5 

of  officers  and  agents  of  fire  insurance  corporations 98 

Schedules: 

of  reinsurance  22 

Scrip: 

issuance  ot,  by  receiver 79 

interest  on 79 

contents  of  . , 79 

Seal: 

of  office  of  superintendent 4 

as  presumptive  evidence 4 

renewal  of    4 

fees  for  affixing 6 

Securities  (see  Deposit  of  Securities): 

deposited  with  superintendent 11,  13 

investment  in  what  kinds 16 

kinds  credited  to  insurance  corporation  as  part  of  capital 17 

promotion  of  insurance  companies,  sale  of 66 

Securities  Guaranty  Corporation: 

incorporation  of 170 

Service: 

of  process  on  superintendent  as  attorney  of  foreign  corporation 30 

of  notices  of  assessment  of  town  co-operative  corporation 269 

Short  Title: 

of  Insurance  Law 1 

Sick  Benefits: 

societies  paying  only  sick  benefits  not  required  to  report 214 

Solvency: 

certificate  issued  by    superintendent   of   insurance 182 

Special  Deposit  (see  Deposit  of  Securities). 


General  Index. 

(Keferences  are  to  sections  ) 
Special  Reserve  Fund: 

of  fire  corporations 130 

examination  of  corporation  before  allowance  of 130 

no  dividends  by  corporation  having 130 

deduction  from  profits,  etc 130 

net  surplus  turned  into 130 

how    invested     131 

in  case  of  extensive  conflagrations 132 

amount  of,  to  be  set  forth  in  annual  statement  to  superintendent. . . .  132 

discontinuance   of    132-a 

Standard  Fire  Insurance  Policy: 

form  of,  to  be  prescribed  and  used 121 

Standard  Provisions: 

concerning  life  and  endowment  insurance 101 

accident  and  health  policies 107 

Statement  (see  Annual  Statement): 

of  insured  to  be  considered  representations 68 

of  monies  in  regard  to  election  of  directors 103 

of  condition,  title  guaranty  company 183 

Statute  of  Limitations  (see  Limitation  of  Actions). 

State  Treasurer: 

payment   of  fees   to 0 

to  keep  record  of  exchange  of  securities  deposited 15 

notice  to  corporation  of  exchange  of  securities 15 

access  to  certain  books  of  superintendent 15 

compensation  for  services  of 74 

access  to  documents  in  department •. 74 

Stationery: 

not  to  be  used  to  further  election 94 

Steam  Boilers: 

insurance  against  damage  by 70 

insurance  and  inspection  of 70 

Stock: 

value   of   to   be  appraised AppeniiLx 

Stocks: 

deposit  of   13 

of  other  corporations 18 

valuation  of  bonds 1^ 

lien  on.  by  certain  insurance  companies !• 

transfer  of,  on  account  of  impairment  of  capital 42 

Stock  Corporation: 

may  become  mutual  life  insurance  corporation 16,  95 

Stock  Corporation  Law  (see  Appendix). 


General  Index. 

(References  are  to  sections.) 
Stockholders: 

may  request  examination  of  corporation 40 

to  make  good  impairment  of  capital 41,  42 

refusal  to  make  impairment  good 42 

transfer  of  stock  by,  before  impairment  made  good 42,  43 

issuance  of  scrip  to.  by  receiver 79 

to  make  good  impairment  of  capital  of  life  insurance  corporation....  86 

approval  of,  to  conversion  of  stock  life  to  mutual 95 

liability  of,  for  improper  dividends 1 17 

approval  to  merger  or  consolidation  of  fire  corporations 129 

Stores: 

insurance   on    110 

Storms: 

insurance  against  loss  by 110 

Sub-Agent:  , 

certificate  of  authority  of 91 

Snibscriptions: 

to  capital  stock 71 

collection  of   71 

to  capital  stock  of  titb  and  credit  guaranty  corporations 171 

Superintendent  of  Insurance: 

appointment  of  2 

salary  of   2 

qualification  of   2 

undertaking  of    2 

custody  of  documents  2 

duties   of    2,      3 

sealed  by,  to  be  received  as  evidence,  etc 4 

in  case  of  absence  of,  duties  devolve  on  deputies 5 

fees  for  affixing  seal  by 6 

payment  of  fees  to  State  treasury 8 

no  charge  for  examination  by 7 

certificate  of  authorization,  issued  by 9 

certificate  of  authorization  to  be  filed  in  office  of 9 

shall  not  file  charter  until  approved  by  Attorney-General 10 

when  certificate  of  authority  not  to  be  issued 10 

examination  into  afi'aira  of  proposed  corporation  by * 11 

deposit  to  be  made  with  superintendent 11 

appointment  of  examiners  by 11 

deposit  of  securities  with 13 

duties  of,  in  regard  to  deposit  of  securities 13 

approval  of  foreign  securities  deposited 13 

cjusent  of,  to  exchange  of  securities 14 

record  of  exchange  of  securities  to  be  kept  by 15 

securities  credited  by 17 

certificate  to  extend  time  for  holding  real  property 20 

shall  require  schedules  of  reinsurance  to  be  filed 22 

consent  of,  to  reinsurance  by  receiver 23 

jurisdiction  of  25 


General  Index. 

(References  are  to  sectiona.) 

Sflperintendent  of  Insurance— (Continued) : 

examination  of  foreign  corporation 25 

deposit  of  securities  with 26 

notice  of  deposit  of  securities  with  Comptroller 26 

report  of  foreign  country  corporation 27 

to  examine  trustees  of  foreign  country  corporation 27 

to  transfer  excess  of  securities  of  foreign  country  corporation 27 

to  receive  deposit  of  securities  of  foreign  country  corporation 27 

attorney  of  foreign  corporation 30 

revocations  of  certificate  of  authority  by 30,  149a 

statement  to  be  filed  in  office  of 31 

renewal  of  certificate  of  authority  of  foreign  corporation 32 

remittance  of  fees  to  foreign  corporations 33 

revocation  of  authority  of  foreign  corporation 33 

revocation  of  certificate  of  authority  of  foreign  corporation  for  neglect 

to  pay  taxes 34 

power  to  collect  taxes  out  of  deposit  of  foreign  corporation 34 

to   forward   process 34 

appointment  of  examiners  by 39 

may  grant  hearing  to  corporation 39 

may  make  examination  on  request 40 

shall  determine  amount  of  impairment  or  deficiency 41 

examination  of  impairment  of  capital  of  mutual  company 43 

issuance  of  requisition  for  examination 41,  43 

may  addresg  inquiries  to  insurance  corporations 44 

to  furnish  forms  for  reports 45 

may  change  forms  of  reports 46 

annual   report   of 46 

igsuance  of  certificate  of  authority  to  agent  of  foreign  corporation. ...  50 

consent  of,  to  amendment  of  charter 62 

revocation  of  license  of  peraon  inducing  the  surrender  of  insurance. ...  60 

promotion  of  insurance  companifes 66 

securities  of  life,  health  and  casualty  corporation*,  held  by 71 

winseut  of,  to  withdrawal  of  securities  deposited  by  life,  health  and 

casualty  corporations    71 

registration  of  policies  and  annuity  bond*. 76 

to  fumiah  copies  of  duplicate  registered  policies. 76 

to  report  insolvency  to  Attorney- General  in  certain  eases 76 

shall  annually  make  valuations  of  policies,  etc S4 

may  restrain  discrimination 89 

may  revoke  certificate  of  authority  of  ag«nt tl 

■kail  make  valuations  of  policies  of  health  insurance 9$ 

power  to  supervise  elections 94 

to    supervise     M 

approval  of,  to  conversion  of  stock  life  to  mutual M 

transfer  of  deposits  to  receiver  by 104 

shall  approve  capital  stock  notes  of  mutual  fire  insurance  oorpormtion,  HI 

approval  of,  to  merger  of  fire  corporations 129 

to  supervise  organizations  assisting  underwriters 13f 

distribution  of  certain  taxes  received  by 140,  149c 


General  Index. 

(References  are  to  sections.) 

Superintendent  of  Insurance — (Continued): 

appointment  of  person  to  collect  certain  taxes 141,  liHk 

certificate  of  solvency iM 

issuance    of    reciprocal    certificate 204-a 

visitation  of  co-operative  companies  oy Wt 

reply  of  officers  to,  to  be  under  oath '^0? 

may  restrain  co-operative  company  from  doing  business ZiOl 

to    approve   forms   of   life   policies 22U 

findings  of,  may  be  reviewed 249 

incorporation  of  company  to  insure  domestic  animals 250 

certificate  to  co-operative  insurance  corporations 200 

certificate  to  voluntary   associations    261 

voluntary  fire  insurance  associations  continued 261 

filing   certificate    261 

declaration  of  intention  to  form  a  co-operative  fire  insurance  corpo- 
ration    263 

Supplementary  Proceedings: 

when  may  be  instituted 66 

Sureties: 

companies  allowed  to  act  as,  in  certain  cases 70 

Surplus: 

investment  of    16 

percentage  of,  to  be  exposed  to  loss 24 

of  corporation  to  be  stated  in  advertisement 48 

of  securities  deposited  of  insolvent  corporation 77 

distribution  of,  by   receiver 79 

distribution  of,  to  policyholders 83 

profits  of  fire  insurance  corporations 117 

Surplus  Profits: 

of  fire  insurance  corporation,  how  estimated 117 

Surrender  Value: 

of  lapsed  or  forfeited  policies 88 

waiver  of   88 

Tax: 

payment,    and    penalty   for    failure Appendix 

Taxation: 

when  reduction  of,  will  not  be  allowed  for  reinsurance 22 

of   foreign  corporations 34 

on  premiums  of  foreign  fire  insurance  corporations 133,  13S 

distribution  of  certain  taxes 140 

appointment  by  superintendent  of  person  to  collect  certain  taxes 141 

on  premiums  of  foreign  mutual  fire  insurance  companies 149a 

distribution  of  annual  tax 149e 

exemption  from,  of  fraternal  societies 246 

Term  Policy: 

standard  form  for 101 

Territory: 

extension  of,  town  co-operative  corporation 278 


General  Index. 

(References  are  to  sections.) 
Theft  (see  Burglary  or  Theft). 

Title  Guaranty  Corporations: 

incorporation  of    170 

certificate  of  incorporation  of 170 

amount  of  capital 170 

subscriptions  to  capital  stock  of 171 

adoption  of  by-laws  of 171 

meeting  to  adopt  by-laws  of 171 

contents  of  by-laws  of 172 

copy  of  by-laws  to  be  filed  with  superintendent 173 

amendment  of  by-laws  to  be  filed  with  superintendent 173 

certificate  of  payment  of  capital  stock 174 

directors  of,  to  be  stockholders 175 

number  of  directors  of 175 

quorum   of   directors 175 

treasurer  of,  to  give  bonds 175 

change  of  number  of  directors  of 175 

investment  of  capital  and  funds  of 176 

creation  of  guaranty  fund  of 176 

when  insurance  cannot  be  made  by 176 

application  of  guaranty  fund 176 

additions  to  guaranty  fund 176 

merger  of    179 

merger  of,  with  banking  corporation 179 

additional  powers  of  certain 180 

may  execute  bonds  and  imdertakings 181 

supreme  court  may  require  statement  filed LS3 

Tornadoes: 

insurance  against  loss  by HO 

insurance,  by  co-operative  fire  insurance  corporations 262 

Transfers: 

of  deposits  by  superintendent  to  receiver 104 

of  risks,  by  co-operative  or  assessment  companies 209 

Transportation: 
of  explosives • ^^^ 

Treasurer  (see  State  Treasurer). 

Trustees: 

of    foreign   country   corporations 27 

transfer  of  securities  to 27 

statement  of  monies  used  in  election  of 103 

Umpire: 

appointment  of,  to  ascertain  fire  damage 121-a 

Unauthorized  Corporations: 

agents  not  to  act  for ^ 

Unauthorized  Insurance: 

not  to  be  transacted ^ 


General  Index. 

(References  are  to  sections.) 
Undertaking: 

of  agent  for  foreign  corporation 134 

penalty  for  failure  of  agent  to  deliver 135 

title  guaranty  companies  may  execute 181 

title  guaranty  company,  justification  upon 183 

Underwriters: 

organizations  to  assist,  supervision 139 

Vacancy: 

on    ticket,    how   filled 94 

Valuation : 

of   policies    84 

of   industrial    policies 84 

of    policies,    upon    what    basis 84 

of   policies,   of   health   insurance 93 

Value  (see  Surrender  Value). 

Verification: 

of    annual    report 44 

of  annual  report  of  foreign  corporation 44 

of  replies  to  inquiries   of  superintendent 44 

Vessels: 

insurance   upon   110 

marine    insurance    upon 150 

Visitation: 

of  co-operative  or  assessment  corporations 207 

Volumes: 

names  of  policyholders  for  elections 94 

Voting: 

for  directors  of  life  insurance  corporation 94 

for  conversion  of  stock  life  corporation  to  mutual 95 

mutual  automobile  fire  insurance  corporations 323 

mutual   automobile   casualty    insurance    corporations 343 

Vouchers: 

when   required   for   disbursements 99 

Waiver: 

of  provisions  of  section  58  void 58 

Wares: 

marine    insurance    upon 160 

Warranty: 

statements  of  insured  not  to  be 68 

Wife: 

can  take  out  policy  on  husband 66 

Wind: 

insurance   against   loss   by HO 

insurance,  by  co-operative  fire  insurance  corporations 262 


General  Index. 

(References  are  to  sections.) 
Withdrawal: 

of  securities  deposited  by  health,  life  and  casualty  corporations 72 

Withholding: 

envelope   or  ballot   from   custodians   or   inspectors 04 

Witness : 

summoned  by  State  Fire  Marshal 372 

Workmen's  Compensation  Corporations;  and  Mutual  Employers*  Liability 
Corporations: 

incorporation  185 

completion    of    organization 186 

directors   and    officers 187 

meetings ;  basis  of  right  to  vote 188 

assessments  189 

dividends   190 

reserves;   supervision;   cancellation  and  reinstatement  of  certificate..   191 

reports  to  and  examinations  by  superintendent  of  insurance 192 

prevention  of  accidents jgg 

authorization  of  foreign  mutual  insurance  corporations 194 


i5^^^ 


359280 


ITY  OF  CALIFORNIA  LIBRARY 


V 


